EY Attractiveness Report Brazil Capturing The Momentum August 2012
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EY Attractiveness Report Brazil Capturing The Momentum August 2012

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Brazil leads the attractiveness scores in Latin America, according to our first Brazil attractiveness survey. Almost 7 out of 10 business leaders declare the country as the most attractive place to ...

Brazil leads the attractiveness scores in Latin America, according to our first Brazil attractiveness survey. Almost 7 out of 10 business leaders declare the country as the most attractive place to establish operations.
Our survey emphasizes the strong footprint of Brazil on the global map and its key strengths, while highlighting the need to improve skills and diversify the economy. It also includes a section on Brazil’s next phase of growth and an analysis of the key growth sectors, which we believe will drive FDI momentum in the country.

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    EY Attractiveness Report Brazil Capturing The Momentum August 2012 EY Attractiveness Report Brazil Capturing The Momentum August 2012 Document Transcript

    • Growing BeyondCapturing the momentumErnst & Youngs 2012 attractiveness surveyBrazil
    • Emerging Markets CenterThe Emerging Markets Center is Ernst & Youngs “Centerof Excellence” that quickly and effectively connects youto the worlds fastest-growing economies. Our continuousinvestment in them allows us to share the breadth ofour knowledge through a wide range of initiatives, tools andapplications. This offers businesses, in both mature andemerging markets, an in-depth and cross-border approach,supported by our leading and highly globally integratedstructure.For further information on emerging markets,please visit: http://emergingmarkets.ey.com
    • Capturing the momentumErnst & Youngs attractiveness survey 2012Brazil Contents 3 Foreword 4 Executive summary 7 Brazil fact sheet 8 World economy outlook 8 Hope, actually 10 Positioning Brazil in the world economy 10 Global FDI surpasses pre-crisis average, but uncertainty prevails 12 A record year 14 Performance 2011: FDI in Brazil reaches a record level 16 FDI by function 18 FDI by sector 28 Where to: Southeast leads FDI; Northeast shows promise for the future 30 Where from: Brazil’s FDI investors 32 Investors’ plans for 2013: a majority have Brazil in mind 34 Great momentum 36 Brazil: Latin America’s leader 39 Brazilian cities: the undisputed leadership of São Paulo 42 Boosting growth 44 Kljgf_ [gfÕ]f[] af :jYrad *()- 45 Brazil’s most attractive sectors in the future: industry supporting services 48 Dgf_%l]je nakagf2 an]jkaÕ[Ylagf f]]] 50 Brazil’s action plan 56 Methodology Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 1
    • Viewpoint Time for innovation Mauro Borges, Chairman, Brazilian Agency for Industrial Development (ABDI) In 2004, the Brazilian Government embarked on a drive to realize the full potential of the country’s industrial sector. It promoted strategies for science, technology, innovation and foreign trade. It was as part of this mission that the Brazilian Agency for Industrial Development (ABDI) was created. The agency, linked to the Ministry of Development, Industry and Foreign Trade (MDIC), liaises between Owing to the the public and private sectors, contributing to Brazil’s continental sustainable development through initiatives that drive dimension of industrial sector competitiveness. Brazil, it has “The mission is not a simple one, as we need to enormous overcome bottlenecks created by production costs,” says ABDI chairman Mauro Borges. “In Brazil’s relevance to the world. manufacturing sector, we have bottlenecks related to both the cost of capital and labor, and the cost of basic inputs. Part of this stems from taxation on production elements and on basic inputs. It is a legacy of the Brazilian industrialization process which must be removed.” :gj_]k [al]k l`] ]pYehd] g^ l`] hgo]j lYja^^ ^gj l`] afmkljaYd k][lgj& É9Zgml -( g^ l`] [gkl [ge]k from taxation. It is far more than the average price of energy in countries that are direct competitors of Brazil,” he says. Another point is the cost of labor. “Just remember that the cost for the company is almost twice the amount of salary that employees receive.” The increase in foreign competition, in the context of international crisis and uncertainty over the recovery of global demand, hinders the progress of Brazil’s industrial sector — which grew by gfdq )&. af *())& @go]n]j$ Y[[gjaf_ lg :gj_]k$ :jYrad ak hgkalagf] lg Z][ge] Y _dgZYd d]Y]j in manufacturing — an expectation also expressed by many foreign businessmen — because it has Y ][akan] ]d]e]fl ^gj afmkljaYd km[[]kk af l`] *)kl []flmjq2 l`] k[a]flaÕ[ cfgod]_] ZYk] g^ f]o technologies. On one hand, Borges says, Brazil has the knowledge centers of excellence to support the industry in strategic sectors, such as biotechnology and microelectronics. On the other hand, it is expanding funding for this knowledge to be transformed into concrete initiatives. “Fortunately we have The Brazilian Development Bank (BNDES), the second largest development bank in the world, which is enhancing and reshaping its credit lines to technological innovation. And we also have The Financing Program for Studies & Projects (Finep) — an agency linked to the Science and Technology Ministry — that provides funding for studies and projects, that focus on credit. It is restructuring its funding lines and shifting from grants to credit.“ Development of the industrial sector is in line with a new economic reality that puts Brazil on the foreign investment map. “The most transcendent event of the last decade is our transformation into a middle-class country with a growing market of mass consumption. Owing to the continental dimension of Brazil, it has enormous relevance to the world.” If this was the biggest development in recent times, there is also a major obstacle, according to Borges: the bottleneck in infrastructure. “This involves two major challenges: physical capital infrastructure (particularly the area of transport logistics) and human capital infrastructure. Brazil falls some way short of the basic and technical training required for industry in the 21st century,” he says. “This is the problem that threatens our ability to take the big development leap.”2 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • ForewordForeword Tom McGrath Jorge Menegassi Americas Senior Vice Chair — Markets CEO, South America & Brazil Ernst & Young Ernst & YoungBrazil has come on in leaps and bounds to become a stable We believe that the next phase of foreign direct investmenteconomy. Despite the risks of an appreciating currency, (FDI) competition will target less tapped activities such asthe domestic market, driven by a burgeoning middle class, establishment of headquarters, research and developmenthas continued to be the backbone of the Brazilian economy. (R&D) centers and innovative business services, driven byThe strong footprint of Brazil on the global map is evidenced the entrepreneurial culture and stable political environment.Zq l`] ^Y[l l`Yl .( g^ l`] j]khgf]flk hdYf lg afn]kl af l`]country in the short term. L`] gmldggc ^gj :jYrad Yk Yf ><A ]klafYlagf ak jgZmkl$ oal` 0+ of the investors believing that attractiveness will improve overBrazil leads the attractiveness scores in Latin America with the next three years. Investors perceive Brazil will be a leaderalmost 7 out of 10 business leaders declaring the country in the energy sector by 2020 with substantially improvedas the most attractive place to establish operations. Rising infrastructure, and they expect improvement in the educationdomestic consumption of goods and services, and a wide base system to bridge the skills gap and develop innovationof industrial and natural resources are the foundation capacity. Also, hosting the FIFA World Cup in 2014 and theof Brazil’s economy. Rio Olympic Games in 2016 is bound to attract international investors across a range of sectors. But Brazil also has toBrazil’s image as a commodity-rich nation attracts foreign make efforts to ensure a secure and smooth operationalinvestment, which creates challenges such as the unwelcome environment, increase transparency, reduce corruption andside effect of pushing the currency value upward. To keep [j]Yl] Y kaehdaÕ] lYp kljm[lmj]&the momentum going and de-risk Brazil from the side effectsof being commodity rich, the Government needs to continue Gmj Õjkl ]alagf g^ l`] Brazil attractiveness survey includesto implement measures to diversify the economy toward a section on Brazil’s next phase of growth — driven by industrynYdm]%Y] Yf affgnYlan] Y[lanala]k& Afkm^Õ[a]fl imYdaÕ] and the services sectors, as well as an analysis of the keypersonnel, high interest rates and a complicated tax system growth sectors, which we believe will drive FDI momentumare some other main challenges the Brazilian economy in the country.is facing. We would like to thank all the decision-makers andIn terms of regional priorities, São Paulo clearly appeals most Ernst & Young professionals who have taken the time tolg afn]klgjk& Af gmj kmjn]q$ egj] l`Yf -- g^ l`] afn]klgjk share their thoughts with us.named São Paulo as the most attractive region in Brazil,^gddgo] Zq Jag ] BYf]ajg *.!& L`] ]n]dghe]fl g^ Yfpromotion to foreign investors of tier two cities are key to:jYradÌk km[[]kk af khj]Yaf_ l`] Z]f]Õlk g^ alk ][gfgea[development more evenly. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 3
    • Executive summaryExecutive summaryWorld economy outlook The reality of foreign investment in BrazilHope, actually A record yearœ Hope, actually œ :jYrad af l`] _dgZYd lgh Ôn] ^gj ><A;geaf_ gml g^ l`] ÕfYf[aYd [jakak$ l`] _dgZYd ][gfgeq klYjl] *()) :jYrad ak l`] k][gf egkl hghmdYj _dgZYd ]klafYlagf af l]jek g^af j][gn]jq eg]$ Yeall]dq o]Yc Yf mfZYdYf[]$ Zml f]n]jl`]d]kk ><A nYdm] Yf Õ^l` af l]jek g^ ><A hjgb][lk& L`] fmeZ]j g^ ><Awith some hope and optimism. The prospects for the world economy hjgb][lk af :jYrad af[j]Yk] Zq +1 af *())$ lg Y j][gj -(/&eYq j]dq gf l`] jYha%_jgol` eYjc]lk J?Ek! [gflafmaf_ lg Z] L`]k] hjgb][lk [j]Yl] Yf ]klaeYl] ).)$).. bgZk&the drivers of growth and recovery. The group of 25 RGMs we monitorYl =jfkl  Qgmf_ Yk Y o`gd] Yj] ]ph][l] lg Zgmf[] ZY[c lg Y[`a]n] œ Manufacturing brings 75% of the jobs, services bring 52% ofan overall GDP growth of 5.9% in 2013 and 6.5% in 2014. Forecasts the projectsZq l`] Afl]jfYlagfYd Egf]lYjq >mf AE>! af alk imYjl]jdq mhYl] Afn]klgjk ]fl]j] :jYrad lg ]klYZdak` ^Y[lgja]k Yk o]dd Yk lYh l`]hjgb][l l`] _dgZYd ][gfgeq lg ]phYf Zq +&- Yf +&1 af *()* rapidly growing services sector in 2011. While industrial activityand 2013 respectively. `Yk Zjgm_`l l`] egkl bgZk /- g^ l`] lglYd bgZk!$ k]jna[] Y[lanala]k `Yn] jan]f ka_faÕ[Yfl hjgb][l fmeZ]jk -* g^ l`] lglYd hjgb][lk!&œ Global FDI surpasses pre-crisis average; however, uncertainty However, Brazil still needs to improve on its attractiveness forprevails kljYl]_a[ ^mf[lagfk `]YimYjl]jk$ J< []fl]jk Yf ]m[Ylagf Yf<]khal] l`] ogjd ][gfgea[ lmjegad$ l`] lglYd _dgZYd afÖgok g^ ><A training). In 2011, Brazil received only 25 strategic projects.jgk] Zq ). af *()) È ^jge alk Yeall]dq dgo ZYkak af *()( È lgUS$1.5t, according to the United Nations Conference on Trade and œ Where from?<]n]dghe]fl MF;L9<!& ><A afÖgok Zgmf[] ZY[c af Ydd eYbgj The US, UK, Japan, Germany and Spain accounted for 59% of theeconomic groups: developed, developing and transition economies. FDI projects in 2011. China is emerging as a strong partner ofL`] MF;L9< ]klaeYl]k l`Yl ><A Ögok oadd jak] eg]jYl]dq af *()* lg :jYrad$ oal` afn]kle]fl Yf ljY] dafcY_]k af[j]Ykaf_ Z]lo]]f l`]YhhjgpaeYl]dq MK)&.l$ ZYk] gf l`] [mjj]fl hjgkh][lk g^ mf]jdqaf_ two countries.^Y[lgjk$ af[dmaf_ ?<H _jgol` Yf [Yk` `gdaf_k Zq ljYfkfYlagfYdcorporations. œ Information, Communications and Technology (ICT) and business services performance: heading toward a service-led attractiveness? Reality The ICT sector generated 105 FDI projects in Brazil in 2011. L`] k][lgj ]e]j_] Yk l`] ^gmjl`%dYj_]kl af l]jek g^ bgZ [j]Ylagf af :jYrad af *()) oal` )/$/*, bgZk& :mkaf]kk k]jna[]k YlljY[l] -+ 2nd: Brazil is the second most attractive global hjgb][lk af *())$ [gfklalmlaf_ )( g^ l`] lglYd ><A hjgb][lk$ mh Zq ]klafYlagf af l]jek g^ ><A nYdm] Yf Õ^l` af l]jek g^ 8% on 2010, a record. Financial services attracted 35 FDI projects in number of projects. *()) / g^ l`] lglYd!$ mh ^jge *( hjgb][lk af *()(& 507 FDI projects were recorded in Brazil in 2011, œ São Paulo remains the undisputed leader for FDI Yf af[j]Yk] g^ +1 kaf[] *()(& The top region for FDI in Brazil is the Southeast; São Paulo is garnering the most attention (26% of the FDI projects). Rio de Janeiro comes k][gf oal` 0 g^ l`] hjgb][lk& L`] l`aj ]klafYlagf ak ;mjalaZY oal` 161,166 jobs were created in Brazil as a result of FDI. only 2% of the projects. The Northeast region is also emerging fast on the FDI radar; it attracted 93 investment projects and created 52% of the FDI projects in Brazil were generated egj] l`Yf -/$((( bgZk Z]lo]]f *((/ Yf *())& by services activities. œ 2013 investment plans Kaplq h]j[]fl g^ l`] Zmkaf]kk d]Y]jk kmjn]q] afa[Yl] Y hgkalan] 26% of FDI projects are established in Sao Paolo. gmldggc YZgml k]llaf_ mh gh]jYlagfk af :jYrad af l`] f]Yj ^mlmj]3 ++ g^ l`]e `a_`da_`l] Õje hdYfk ^gj ]klYZdak`af_ Y[lanala]k af l`] [gmfljq&4 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Brazil, the investors’ view The future of attractiveness in BrazilGreat momentum Boosting growthœ Brazil: the continent’s most attractive market œ Action 1: improve skills and secure the operational environmentSeventy-eight percent of the survey respondents named Brazil as Of the survey respondents, 28.8% see the development of educationthe most attractive country in Latin America. Eighty-seven percent and skills as Brazil’s priority measure to increase its attractiveness.g^ afn]klgjk [gfka]j :jYradÌk eYjc]l kar] lg Z] alk egkl YlljY[lan]Ykk]l& :jYradÌk kljgf_ ]flj]hj]f]mjaYd [mdlmj] [al] Zq /)&1 g^ l`] œ Action 2: build innovation capacity and diversify sectorsj]khgf]flk! `Yk ^mjl`]j Zgdkl]j] alk hgkalagf Yk Y lgh [`ga[] ^gj Lg Zmad alk affgnYlagf [YhY[alq$ :jYrad f]]k lg ^g[mk gf aehjgnaf_foreign companies. education and training in new technologies according to 60.3% of investors. Our panel of investors also think Brazil should increaseœ An energy leader in the making lYp af[]flan]k ^gj affgnYlan] [gehYfa]k *1&/! Yf ]n]dgh bgaflBrazil’s oil and gas sector will drive the country’s growth in the research programs (26.1%). These measures will help developcoming years according to 44.2% of the investors. A staggering Y egj] an]jkaÕ] ][gfgeq$ ][j]Ykaf_ ]phgkmj] lg l`] ngdYladalq+(&) g^ l`] afn]klgjk ]ph][l :jYrad lg Z] l`] d]Y]j af l`] of commodities markets (seen as the main sector driving growth]f]j_q k][lgj Zq *(*($ Y na]o jan]f Zq l`] ak[gn]jq g^ for 44.2% of the investors).pre-salt reserves. œ Action 3: promote Brazil’s regionsœ Questions on skills, costs and operating conditions Brazilian second cities are currently not on investors’ radar. Thirty-DYZgj kcaddk jYfc Õ^l` af :jYradÌk egkl YlljY[lan] [jal]jaY& DYZgj nine percent of respondents could not indicate a strong preference[gklk jYfc em[` dgo]j )(l`$ o`a[` ,( gfÌl Õf YlljY[lan]!$ for cities other than São Paulo and Rio de Janeiro. However,just ahead of the political, legislative and administrative ;mjalaZY Yf :]dg @gjargfl] `Yn] jYof afn]klgj ngl]k3 l`]k] o]j]]fnajgfe]fl ))l`$ o`a[` ,) gfÌl Õf YlljY[lan]!& L`] dgo% `a_`da_`l] Yk hj]^]jj] [ala]k Zq *,&- Yf *(&* g^ l`] afn]klgjk&imYdalq$ `a_`%[gkl ljYfkhgjlYlagf kqkl]e kladd j]eYafk Y o]Yc O`]f Ykc] YZgml hjgb][lk lg af[j]Yk] l`] YlljY[lan]f]kk g^ :jYradÌkfactor for investors (only 43.4% mentioned it as attractive). [ala]k$ af^jYkljm[lmj] ]n]dghe]fl oYk l`] Õjkl j]hdq ^jge --&0 of the respondents.œ Kljgf_ [gfÔ]f[] af l`] ^mlmj]F]Yjdq 0+&, g^ l`] j]khgf]flk Z]da]n] :jYradÌk YlljY[lan]f]kkwill improve over the next three years. Perception 78% of survey respondents perceive Brazil as the most attractive country in Latin America. 60% of business leaders interviewed are considering setting up operations in Brazil (in 2013). 30% of investors expect Brazil to be the energy sector leader by 2020, a view driven by the discovery of pre-salt reserves. 60% of respondents consider the development of education in new technologies as the main driver to build Brazils innovation capacity. 56% of business leaders think infrastructure development is the priority to increase the attractiveness of Brazilian second cities. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum -
    • Executive summary Picture: panoramic view of tropical beach, Fernando de Noronha. Cover picture: sandy coastline, Brazil.6 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Brazil fact sheetCapital Administration Bordering countriesBrasília, Brazil consists of 26 States Argentina, Bolivia, Colombia, Frenchlocated in the Midwest region and one Federal District Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela Land area 0$,-1$,)/ ki ce Population (July 2012) *(-&/ eaddagf Õ^l` egkl hghmdgmk [gmfljq af l`] ogjd! Proportion of urban population in total 0,&. (2011) Age structure (2011) (Ç)1 q]Yjk +*&0!3 *(Ç-, q]Yjk -(&1!3 --  YZgn] ).&+! Languages G^Õ[aYd dYf_mY_]2 Hgjlm_m]k] Ydkg l`] egkl oa]dq khgc]f dYf_mY_]! Note: other common languages in Brazil include Spanish (border areas and schools), German, Italian, Japanese, English and a large number of minor Amerindian languages President Dilma Rousseff (since 1 January 2011) Vice President Michel Temer (since 1 January 2011) GDP (2011) MK*&-l kapl`%dYj_]kl ][gfgeq af l`] ogjd! J?E> ]ph][lk :jYrad lg Z][ge] l`] Õ^l`%dYj_]kl ][gfgeq Zq *()/3 ?<H MK+&+l GDP — real growth rate (2011) *&/ GDP per capita — PPP (2011) US$11,600 Distribution of family income — -)&1 Gini index (2012) GDP composition by sector (2011) :jYrad2 9_ja[mdlmj] -&-!3 Afmkljq */&-!3 K]jna[]k ./! ;`afY2 9_ja[mdlmj] )(&)!3 Afmkljq ,.&0!3 K]jna[]k ,+&)! AfaY2 9_ja[mdlmj] )/&*!3 Afmkljq *.&,!3 K]jna[]k -.&,! Public debt (2011) :jYrad2 -,&, g^ ?<H3 ;`afY2 ,+&- g^ ?<H3 AfaY2 -)&. g^ ?<H Labor force (2011) 104.3 million Unemployment rate (2011) .&( AfÕYlagf *())! .&- Stock exchange BM&FBOVESPA (third-largest exchange in the world by market value; leading exchange in Latin America) Central bank Banco Central do Brasil SELIC rate (base interest rate) 0 Bmdq *()*! Federal corporate income tax rate +, Federal individual income tax rate */&- State value-added tax (Ç*- Major international airports Brasilia International Airport Rio de Janeiro Galeao Antonio Carlos Jobim International Airport São Paulo Guarulhos International Airport Major seaports Ilha Grande (Gebig), Paranagua, Rio Grande, Santos, Sao Sebastiao and Tubarao Major cities São Paulo, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador and Santos Time zone Three hours behind Greenwich Mean Time (GMT) Currency unit Brazilian Real (BRL) Exchange rate (2011) MK) 5 )&./*-) :JD3 AFJ) 5 (&(+--/ :JD3 ;FQ) 5 (&*-00/- :JD Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 7
    • World economyoutlookHope, actually;geaf_ gml g^ l`] ÕfYf[aYd [jakak$ Although many RGMs are likely to witness National and regional differences do existthe global economy started 2011 in kdgo]j ]phYfkagf af *()* Yl ,&1$ l`]k] among emerging market economies, andrecovery mode, admittedly weak and economies are expected to remain engines ka_faÕ[Yfl _jgol` a^^]j]f[]k Yj] gh]faf_unbalanced, but nevertheless with of global recovery, with growth expected to up this year. Asian RGMs are projected tosome hope and optimism.1 However, accelerate in the medium term. The group k]] `a_`]j _jgol` jYl]k g^ .&* af *()*the global economic recovery started to g^ *- J?Ek o] egfalgj Yl =jfkl  Qgmf_ compared with RGMs in the EMEIA andslow down in the second half of the year as a whole should bounce back to achieve the Americas region that are expectedwith prospects dimming, investor and Yf gn]jYdd ?<H _jgol` g^ -&1 af *()+ Yf lg ]phYf Yl ,&( Yf +&* j]kh][lan]dq&[gfkme]j [gfÕ]f[] o]Yc]faf_ Y_Yaf .&- af *(),& Strong RGM performers in 2013 areand risks sharply escalating during the ]ph][l] lg Z] :jYrad #-&)! Yf ;`ad]fourth quarter. Economic growth in many The continued emergence of an #,&0! af l`] 9e]ja[Yk3 AfaY #/&-!$developed economies came to a standstill economically active middle class, CYrYc`klYf #/&(! Yf IYlYj #.!toward the end of 2011 as many Western combined with favorable demographics, af =E=A93 ;`afY Yf @gf_ Cgf_ #0&+!$economies came face-to-face with the fuels growth of domestic demand that is Na]lfYe #.&1!$ Afgf]kaY #.&.!likelihood of a double-dip recession. the backbone of growth in the emerging Yf L`YadYf #.&-! af 9kaY&The increased uncertainties in the world. A sustained increase in trade amongEuropean Monetary Union, continued high emerging markets will help further insulate The IMF in its July 2012 quarterly updatesovereign debt and respective austerity economic development from unfavorable projects that the global economy willprograms now showing their real impact developments in the western hemisphere. ]phYf Zq +&- Yf +&1 af *()* Yfon GDP growth are the main forces holding Those developing markets that rely on *()+ j]kh][lan]dq$ n]jkmk l`] +&- Yfback economic recovery in the West. energy exports may see some short-term ,&) _jgol` hjgb][l] af 9hjad *()* ^gj variation; however, the mid- to long-term these years. Our map shows the projectedRapid-growth economies recently showed outlook remains strongly positive as energy GDP growth rates for both major Westernsome softening in their unprecedented prices are poised to increase further. economic zones and RGMs, with Brazil_jgol` ljYb][lgjq$ Õjkldq oal` l`] aehY[l Investments into emerging markets will clearly continuing to outperform growthg^ l`] ÕfYf[aYd [jakak Yf$ egj] j][]fldq$ remain strong as Western companies are expectations in the West and around halfreduced demand for commodities and seeking to participate in this projected of the emerging economies.a slowdown in exports of manufactured growth and the emerging markets aregoods caused by developments in Europe. l`]ek]dn]k mkaf_ l`]aj ^YngjYZd] ÕfYf[aYd positioning to drive development.1. Rapid-growth markets forecast, Ernst & Young, July 2012.8 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • World economy outlookPicture: Pantanal wetlands, Brazil.Summing it all up: signs of recovery emerge, but downside risks prevail World RGMs 3.9 3.5 3.9 6.3 4.9 5.9 Russia 4.3 4.0 3.1 UK 0.7 0.2 1.4 Euro area 1.5 -0.3 0.3 US Japan 1.7 2.0 2.3 -0.7 2.4 1.5 China Mexico 9.2 7.5 8.4 India 3.9 3.8 3.8 7.5 5.7 7.5 Colombia 5.9 4.5 4.2 Brazil 2.7 2.2 5.1 South Africa Argentina 3.1 2.8 3.8 Chile 5.9 4.7 4.8 8.9 3.3 3.5 Real GDP growth rates (%) 2011 2012 2013Sources: World Economic Outlook (WEO): Growth resuming, dangers remain, April 2012, IMF 2012. Rapid-growth markets forecast, Ernst & Young, July 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 9
    • World economy outlookPositioning Brazil in the world economyGoaf_ lg :jYradÌk eY[jg][gfgea[ klYZadalq However, in the medium term, growth measures in the pipeline on the upside. Otherand growing domestic demand, the country is projected to pick up to 5.1% in 2013 and factors such as the country’s increasing tradehas withstood the waves of crisis with ,&0 af *(),$ jan]f dYj_]dq Zq ge]kla[ with China and any uplift in the US economyresilience.2 9^l]j Y Zja]^ hYmk] af I+ *())$ consumption. Growth-supporting measures, oadd Ydkg Z]f]Õl :jYrad&Brazil’s economy returned to growth in the km[` Yk dgo]jaf_ g^ d]faf_ jYl]k Zq l`]q]YjÌk ÕfYd egfl`k Yk ge]kla[ kh]faf_ []fljYd ZYfc Yf YalagfYd Õk[Yd klaemdmk Zq Achieving the Government of Brazil’sj]Zgmf] af j]khgfk] lg _gn]jfe]fl the Government, will provide further impetus. YeZalagmk _gYdk ^gj ][gfgea[ _jgol` gn]jstimulus measures, including tax cuts. The risks to the country’s growth forecast l`] e]ame l]je j]imaj]k Y k`a^l af ^g[mkGDP growth in 2012 is expected to slow to af *()+ fgo Yhh]Yj egj] ZYdYf[] jYl`]j YoYq ^jge mkaf_ Õk[Yd hgda[q lg klaemdYl]2.2%, as opposed to the earlier forecast of than skewed to the downside. Although demand and toward investment in+&)$ m] lg Y d]kk ^YngjYZd] _dgZYd gmldggc& Brazil remains exposed to the fallout from infrastructure and education, which are Y egj] hjgfgmf[] ]l]jagjYlagf af _dgZYd l`] Za__]kl [gfkljYaflk l`] ][gfgeq2. Growth resuming, dangers remain, April 2012, IMF economic conditions, there is the potential is facing. Without this investment, 2012; WEO update: Global recovery stalls, downside risks intensify, January 2012, IMF 2012; Global Economic for growth to accelerate more rapidly than GDP growth is forecast to average only Prospects January 2012, The World Bank, 2012; Rapid- growth markets forecast, Ernst & Young, July 2012. expected given the counter-cyclical policy around 4% per annum during 2015–20.Global FDI surpasses pre-crisis average,but uncertainty prevailsGlobal FDI inflows Despite the world economic turmoil, In developed economies, much of the(US$t) l`] lglYd _dgZYd afÖgok g^ ><A jgk] Zq _jgol` af ><A j]kmdl] ^jge [jgkk%Zgj]j ). af *()) È ^jge alk Yeall]dq dgo M&As, particularly within Europe. FDI 2.0 ZYkak af *()( È lg MK)&-l$ Y[[gjaf_ lg afÖgok aflg l`] =mjgh]Yf Mfagf =M! 1.7 l`] MF;L9<& ><A afÖgok Zgmf[] ZY[c af[j]Yk] +*&* lg j]Y[` MK,*(&/Z 1.5 in all major economic groups: developed, in 2011. The US remained the largest 1.3 developing and transition economies. recipient of foreign investment in 2011, 1.2 YlljY[laf_ MK**.&1Z3 )- mh Developing and transition economies from 2010.3 Y[[gmfl] ^gj -) g^ _dgZYd ><A af *()) Yk l`]aj afÖgok j]Y[`] Y f]o j][gj `a_`$ Yl L`] MF;L9< ]klaeYl]k ><A Ögok oadd jak] Yf ]klaeYl] MK//.Z$ jan]f hjaeYjadq moderately in 2012 to approximately 2007 2008 2009 2010 2011 Zq jgZmkl _j]]fÕ]d afn]kle]flk& L`] MK)&.l$ ZYk] gf l`] [mjj]fl hjgkh][lkSource: UNCTAD. developing countries’ rise was supported of underlying factors, including GDPNote: this data includes greenfield and expansionprojects and M&As. Zq Y )( af[j]Yk] af 9kaY Yf ). af[j]Yk] _jgol` Yf [Yk` `gdaf_k Zq ljYfkfYlagfYd af DYlaf 9e]ja[Y Yf l`] ;YjaZZ]Yf& :jYrad corporations. It expects only moderate captured the highest share (31%) in Latin _jgol` af Ydd l`j]] _jgmhk È ]n]dgh]$ 9e]ja[Yf Yf l`] ;YjaZZ]Yf afÖgok g^ ><A& developing and transition economies. AfÖgok g^ [YhalYd aflg 9^ja[Y [gflafm] lg decline marginally for the third consecutive q]Yj& =_qhl$ DaZqY Yf LmfakaY ]ph]ja]f[] k`Yjh ^Yddk dYj_]dq j]Ö][laf_ l`] mfklYZd] 3. Global Investment Trends Monitor, January 2012, UNCTAD, kalmYlagf Y^l]j l`] 9jYZ Khjaf_& 2012; World Investment Report, July 2012, UNCTAD, 2012.10 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • ViewpointThe Rio 2016 Olympics:a great source for investment opportunities Márcio Fortes$ Hj]ka]fl g^ Gdqeha[ HmZda[ 9ml`gjalqBy hosting a succession of high-profile related to the Olympics — respecting for each individual sport, such asglobal events over the next four years, deadlines and basic requirements from canoe slalom, which requires complexBrazil will enhance its standing in the the IOC and the 41 international sports hydraulic engineering that cost £90minternational arena. They are “Rio+20,” federations involved with the event. at the London Olympics. “Withoutthe UN world conference on sustainable those facilities there is no competition.development in 2012, the FIFA “Since Rio’s candidature, we have aimed We can’t afford mistakes and everythingConfederations Cup in 2013, the FIFA to demonstrate that the city has must be ready a year in advance for testWorld Cup a year later, and, finally, the proactive management involving the events,” he says.Olympic Games 2016 in Rio de Janeiro. three levels of government — municipal,Preparations for the Rio Olympics have state and federal — with major projects Another major concern is to providebeen transforming the city since 2009, of urbanization, sanitation, housing accommodation for the “Olympic family,”when the nomination was ratified by the and urban transportation. Regardless of which includes athletes, technicalInternational Olympic Committee (IOC). the Olympics, those projects taken committees, referees and other together show that the city is moving professionals directly involved in forward and will continue to do so,” says the competition. It’s expected Rio 2016 The Olympics the President of APO, Márcio Fortes. will involve 11,000 athletes, are a great 40,000 journalists and approximately source of Fortes, former Minister of Cities under 80,000 volunteers. “The Olympics Lula’s Government, refers to projects such are a great source of attraction of attraction of as the cleaning up of the Gloria Marina investments. The hospitality industry, investments. and the Lagoa Rodrigo de Freitas, which for instance, has an unprecedented will host the nautical competitions; opportunity for expansion in Rio andA study conducted by the Foundation the revitalization of Rio de Janeiro’s port, brand new legislation has encouragedInstitute of Administration (FIA) where the harbor will be deepened to the construction of hotels. There areestimates that public and private receive up to six tourist ships; and the also major opportunities in transportinvestments in the games infrastructure urban mobility projects such as the Bus and restaurants, and there is an urgentwill inject US$14.4b into the country — Rapid Transit (BRT) that will link the four demand for qualified manpower to meetJag ]kh][aYddq È aehY[laf_ -- a^^]j]fl different competition areas in the city. visitors’ demands. The Olympics alsosectors of the economy. Preparations for require expert advice in the constructionthe games are overseen by the Olympic Other essential projects for the Olympic of facilities, creating opportunities forPublic Authority (APO), a public Games include the creation of a media associations between Brazilian andconsortium that brings together federal, center and broadcasting facilities, foreign companies and the arrival ofstate and municipal representatives a modern anti-doping laboratory and skilled foreign professionals,” says Fortes.whose main assignment is to monitor and the construction of the velodrome anddeliver the infrastructure and services athletics stadium, as well as facilities Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 11
    • A record yearThe reality of foreign investment in BrazilPicture: Ibicui river and landscape, Brazil.12 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • A record year 39% increase in FDI projects since 2010. 507 projects in 2011, a record number. 161,166 jobs created in 2011. 75% activity. of total jobs generated from industrial 52% activities. of total projects driven by services 26% of FDI projects gather in Sao Paolo. 60% of the business respondents in favor of setting up operations in Brazil. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 13
    • A record yearPerformance 2011:FDI in Brazil reaches a record levelNumber of FDI projects Jobs created FDI by value MKZ! 161,166 63 507 124,125 127,406 47 45 44 366 289 88,430 268 165 48,901 19 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011Source: fDi Intelligence. Source: fDi Intelligence. Source: fDi Intelligence.9_Yafkl l`] ZY[cjgh g^ Y ]l]jagjYlaf_ acted as a major stimulus for international However, Brazil faces some challenges]pl]jfYd ]fnajgfe]fl È Yf mf[]jlYaf companies to invest in Brazil. Furthermore, related to shortage of skilled workforcegrowth outlook for the US and a heightened Brazil’s hosting of the 2014 FIFA World Cup Yf l`] imYdalq g^ alk af^jYkljm[lmj]$ l`Yl=mjgh]Yf kgn]j]a_f ]Zl [jakak È ><A af Yf l`] *(). Gdqeha[k oadd [gfljaZml] lg Y[l Yk aeh]ae]flk ^gj _dgZYd [gehYfa]k:jYrad kmj_] af *())& L`] fmeZ]j g^ ><A infrastructure development and attracting to invest in it.hjgb][lk af :jYrad af[j]Yk] Zq +1 lg j]Y[` additional FDI into the country.4 Our research-(/ hjgb][lk Yf ><A afn]kle]fl ha[c] mh hYf]d [gfÕje] l`]k] klj]f_l`k af :jYrad DY[c g^ imYdaÕ] h]jkgff]d ak Y c]q o]Ycf]kkpace with 43% growth in 2011. with respondents citing the large domestic of the Brazilian economy. According to market, the long-term economic growth j]k]Yj[` mf]jlYc]f Zq l`] FYlagfYdKaf[] *((/$ l`] fmeZ]j g^ ><A hjgb][lk trajectory and the wealth of natural resources Industry Confederation (CNI), 69% ofhas continuously risen, indicating investors Yk l`] egkl ka_faÕ[Yfl YnYflY_]k ^gj l`] the 1,616 companies interviewed face[gfÕ]f[]& @go]n]j$ l`] kme afn]kl] [gmfljq& 9 dYj_] fmeZ]j g^ gmj j]khgf]flk a^Õ[mdla]k m] lg l`] dY[c g^ kcadd] dYZgj&af Y hjgb][l `Yk Z]]f ]h]f]fl gf l`] also mentioned the openness of Brazilian >a^lq%log h]j[]fl g^ afmkljaYd Õjek afa[Yl]macroeconomic conditions. In 2009 kg[a]lq$ o`a[` ]eZjY[]k an]jkalq g^ jY[] l`Yl l`] hggj imYdalq g^ ZYka[ ]m[Ylagf akYf *()($ o`ad] l`] fmeZ]j g^ hjgb][lk Yf j]da_agf È Yf aehgjlYfl ^Y[lgj ^gj ^gj]a_f one of the main impediments to workersaf[j]Yk]$ l`] jakcq _dgZYd ][gfgea[ investors who might seek to locate personnel _Yafaf_ imYdaÕ[Ylagfk& L`] hjgZd]e akoutlook kept the value invested relatively in the country. particularly acute in the case of companieslow. The average value of an FDI project seeking to recruit top technical and][daf] ^jge MK)/-e af *((0 :jYrad j][gj] -(/ hjgb][lk af *())$ Yf management talent. Measures undertakento US$120m in 2010, mainly due to increase of 39% over 2010 and the highest Zq :jYradk ^gje]j Hj]ka]fl DmdY Y KadnYinvestors’ unwillingness to commit large growth rate achieved among the countries have improved access to education in theamount of funds, then increased slightly on the list. It ranked second in terms of country. Further, ruling President of Brazilto US$124m in 2011. ><A nYdm]$ Z]`af ;`afY Yf Y`]Y g^ AfaY$ Dilma Rousseffs focus on enhancing Brazils the US and the UK. The average value of a higher education is expected to create aA growing middle class, strong domestic project in Brazil in 2011, at US$124m, was fYlagf oal` Y egj] hjgm[lan] dYZgj ^gj[]&demand and huge untapped reserves of `a_`]j l`Yf af ;`afY MK/)e! Yf AfaY Initiatives, such as Brasil Maior (Biggernatural resources has placed Brazil as a (US$63m). In comparison with its Latin :jYrad! dYmf[`] Zq l`] ?gn]jfe]fl g^c]q afn]kle]fl ]klafYlagf Yegf_ _dgZYd American peer group, Brazil clearly stands Brazil in 2011, that focus on increasingcompanies with an emerging market-focused out with our survey suggesting that Brazil the country’s competitiveness, enhancingportfolio. Supportive government policies, `Yk Zq ^Yj l`] `a_`]kl YoYj]f]kk Yegf_ productivity, raising investments andincluding tax incentives for foreign investors foreign investors. stimulating technological innovation, shouldtargeting local production and content, j]af^gj[] afn]klgjk [gfÕ]f[] af l`] ea lg 4. “Emerging Markets: Brazil and Chile,” Frost & SullivankaehdaÕ[Ylagf g^ da[]fkaf_ hjg[]mj]k Yf website, www.frost.com$ Y[[]kk] *- 9hjad *()*3 ÉF]o ><A long term.j]_mdYlgjq ^jYe]ogjc$ kmZkaar] [j]al Record Set in Brazil,” IHS Global Insight Daily Analysis, 27 January 2012, via Dow Jones Factiva, © 2012,Yf ]Ykq ÕfYf[af_ ghlagfk `Yn] Ydkg IHS Global Insight Limited.14 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Viewpoint Brazil sets records in FDI Fernando Blumenschein, Projects Coordinator, Getulio Vargas Foundation (FGV) DYlaf 9e]ja[Y jYak] MK)-+Z af ><A of the country in Latin America as a more production and consumption of goods in 2011, a record for the region, consolidated democracy, along with and services over the past decade. j]hj]k]flaf_ )( g^ l`] _dgZYd Yegmfl respect for the continuity of its policies and “Another factor is the diversification of in the same period. The leader in the rules and the transition of power. “In some the economy. Of all the Latin American region, Brazil was the destination for ways, this differentiates Brazil from other economies, and even globally, Brazil has ,+&0 g^ afn]kle]fl Ç lglYdaf_ MK..&/Z$ countries. The democratic continuity is an been attracting investments that would the largest amount in a single year in the important issue which is globally noticed,” not be directed to countries with smaller history of the country, according to data defines Blumenschein. markets, with less diversification or with released in May by the UN Economic a less appealing logistical position. Brazil Commission for Latin America and the has natural resources, tourism and Caribbean (ECLAC). “Big economies Brazil has agribusiness potentials and a diversified around the globe have been increasingly natural processing industry and a wide range of investing in Brazil for a number of exports. These advantages place the reasons. One key point is the country’s resources, country ahead of many global geographical size within Latin America. tourism and economies,” says Blumenschein. When it comes to logistics and geopolitics, Brazil’s geographical location allows agribusiness A further factor would be Brazil’s corporations to use it as a strategic entry potentials and a diversified macroeconomic stability, based on fiscal point to the continent,” says Fernando processing industry. stability, public spending consistency and Blumenschein, Projects Coordinator an inflation targeting policy. “Our for Getulio Vargas Foundation (FGV), The Projects Coordinator for FGV also monetary policy framework has been one of the top higher education highlights the size of the consumer implemented for years and is still institutions in Brazil. market, which saw the arrival of more improving. Taken together, these factors than 30 million people who were lifted provide predictability and certainty for The reasons for the attractiveness of Brazil out of poverty and into the middle class investors and the arrival of capital is are more than just geographical, adds the in recent years, and a better distribution increased,” concludes Blumenschein. expert. One important factor is the position of income that has maximized theHigh interest rates and a complicated tax L`] :jYradaYf ][gfgeq ak Z]f]Õlaf_ commodity-rich status is the drainingsystem also remain key concerns for the ka_faÕ[Yfldq ^jge alk [geegalq Zgge$ of resources away from other industryeconomy. Brazil’s growth stalled in the which attracts foreign investment and sectors. The shortage of talent coupledsecond half of 2011 mainly due to the makes the economy thrive. However, this with the strong Brazilian real creates anla_`l]j egf]lYjq Yf Õk[Yd hgda[a]k Yghl] also leads to an unwelcome side effect additional risk of deindustrialization ofZq l`] ?gn]jfe]fl Yea khaddgn]j ^jge of pushing the value of the currency the Brazilian economy. In the wake of the=mjgh]Ìk ]Zl [jakak& L`] [gmfljqÌk []fljYd upward. This currency appreciation Brazilian economy’s focus and dependenceZYfc ak fgo mf]jlYcaf_ e]Ykmj]k lg hmlk Y `m_] Zmj]f gf l`] ]phgjl on commodities, the Government needsstimulate investment and to spur economic competitiveness of the country, with to undertake initiatives to diversify thegrowth through measures such as interest many of its manufacturers struggling to economy and create a push towardrate reductions, tax cuts and a relaxation of remain competitive on the world stage. developing and promoting value-addedZYfc d]faf_ j]imaj]e]flk&5 Another risk emanating from Brazil’s and innovative activities and sectors.-& É;Yk` Zggkl ^gj k[`ggdk af :jYrad$Ê ::; o]Zkal]$ news.bbc. co.uk, accessed 11 July 2012; “Brazil and U.S. Accentuate Top five recipient countries by number of projects the Positive,” The New York Times website, www.nytimes.com, Y[[]kk] )) Bmdq *()*3 ÉL`] Ë;`afYÕ[YlagfÌ G^ :jYrad$Ê >gjZ]k Rank Lgh Ôn] [gmflja]k Number of projects Change Value website, www.forbes.com, accessed 11 July 2012; “Wrapup )%:jYrad afÖYlagf kdgok egj] l`Yf ]ph][l]$Ê J]ml]jk o]Zkal]$ 2011 vs. 2010 (US$m) 2010 2011 2011 www.reuters.com, accessed 28 April 2012; “Brazil Economic Update,” Deutsche Bank, 9 February 2012, via ThomsonONE. 1 United States )$-** 1,707 )* -/$*/- com; “Brazil blames all of its problems on the exchange rate, but keep ignoring structural reforms,” Bloomberg website, 2 China 1,344 1,409 - 100,688 brazilianbubble.com, accessed 30 April 2012. 3 United Kingdom 941 1,014 0 36,039 4 India 774 932 *( -0$*.) - Brazil 366 -(/ +1 62,916 Source: fDi Intelligence. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum )-
    • A record yearFDI by function 6% 9% 10% 5% 3% 4% 13% 27% 52% 75% Source: fDi Intelligence. 59% Afmkljq af[dm]k2 eYfm^Y[lmjaf_$ dg_akla[k$ akljaZmlagf  ljYfkhgjlYlagf$ FDI in other functions ]d][lja[alq& K]jna[]k af[dm]k2 kYd]k$ eYjc]laf_  kmhhgjl$ Zmkaf]kk k]jna[]k$ 37% FDI in strategic functions design, development & testing, customer contact center, technical support center, maintenance & servicing, ICT & internet infrastructure, shared services center. FDI in services KljYl]_a[ ^mf[lagfk af[dm]k2 `]YimYjl]jk$ j]k]Yj[`  ]n]dghe]fl$ ]m[Ylagf  FDI in industry training. Other functions includes: retail, construction, recycling, extraction. Number of Job creation FDI valueFDI projectsIndustrial activities bring jobsDuring 2011, investors committed Brazil’s strong position in the minerals Over the past decade, Brazil hasMK.*&1Z af :jYrad$ -1 g^ o`a[` space. Automotive, which has aroused ]ph]ja]f[] ^Ykl _jgol` gf l`] ZY[c g^went into the industrial sector. A total of interest from various European companies, alk ja[` [geegalq ZYk]& @go]n]j$ l`])1( hjgb][lk Yf )*($//, bgZk /- g^ can easily target the domestic population country will have to look to other areasl`] [gmfljqÌk lglYd g^ f]o ><A bgZk!$ oal` oal` _jgoaf_ akhgkYZd] af[ge]& for development to diversify further andYf Yn]jY_] g^ .+. bgZk h]j hjgb][l$ o]j] to shield itself from the huge volatility[j]Yl] Zq l`] afmkljaYd k][lgj& L`] hj]k]f[] Our survey participants ranked oil and gas af`]j]fl af l`] _dgZYd [geegala]k eYjc]lk&of natural resources and vast land has Yk l`] lgh k][lgj lg YlljY[l ><A jan]f Zq Investment in industrial activity, includingalways made Brazil attractive for industrial the recent discovery of the pre-salt layer infrastructure, along with a strong cultureactivities. The country ranks sixth in the off the coast of Southern Brazil. Real estate of entrepreneurship, will help to drive a shiftogjd af dYZgj ^gj[] kar]& @go]n]j$ m] lg and construction came next, creating from commodities toward manufacturedits long reliance on commodities and imports an expectation that large infrastructure goods. Between 2011 and 2014, Brazil’sof manufactured goods, FDI in industrial hjgb][lk oadd Z] hml af hdY[] gn]j l`] f]pl National Economic and Social Developmentactivity has not attained its full potential. few years. Unsurprisingly, agriculture and Bank (BNDES) forecasts that the county’s tourism rank high for investors as well as industrial and infrastructure sectors willWhen investing in industrial projects in consumer products, mining, transportation receive a total investment amounting toBrazil, investors target the following sectors: Yf Ymlgeglan]& L`] a^^]j]f[] Z]lo]]f MK1(.Z :JD)&.l!& 9[[gjaf_ lg :F<=K$afmkljaYd eY[`af]jq$ ]imahe]fl  lggdk existing FDI projects and investor sentiment Brazil’s manufacturing industry is expected(32 projects); automotive (26 projects); j]n]Yd] Zq l`] kmjn]q ak afl]j]klaf_ lg lg j][]an] MK,**Z :JD/,)Z!$ Yfand metals (20 projects). During 2011, note, showing potential not only for oil infrastructure and construction projects arethe metals sector topped industrial projects Yf _Yk Zml Ydkg ^gj Y_ja[mdlmj]$ [gfkme]j hjgb][l] lg j][]an] MK,0,Z :JD0,0Z!af bgZ [j]Ylagf$ YlljY[laf_ +0$.)+ bgZk$ Yf products, and tourism that is yet to during the same period.6Ymlgeglan] [Ye] af k][gf )-$-)- bgZk!& manifest in investment dollars.Investment in the metals sector underlines 6. “BNDES Sees 1.6 Trillion Reais of Brazil Investment 2011– 2014,” The Businessweek website, www.businessweek.com, accessed 30 April 2012.16 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Services bring the projectsBrazil received 262 support services @go]n]j$ l`]k] hjgb][lk dY[c af Zgl` k[Yd] services projects, dominating the sectorprojects in 2011, recording the highest and size, costing investors on average and providing evidence of Brazil’s growinggrowth rate (53%) and accounting for 52% MK.-e Yf [j]Ylaf_ YZgml /1 bgZk h]j importance among vendors across theof the investment projects in the country. project, in comparison with industrial projects ogjd& @go]n]j$ al [j]Yl] gfdq )/ g^ l`]The services sector remains integral to (average size of project: US$196m; lglYd kmhhgjl k]jna[]k bgZk$ oal` Yf Yn]jY_]l`] :jYradaYf ][gfgeq kaf[] al [gfljaZml]k Yn]jY_] bgZ [j]Ylagf h]j hjgb][l2 .+.!& g^ *- bgZk h]j hjgb][l&YhhjgpaeYl]dq ./ g^ l`] ?<H& L`] k]jna[]kk][lgj af :jYrad ak jan]f Zq alk dYj_] mjZYf œ Sales, marketing & support recorded œ Business services continue topopulation (80%) compared with some the highest share within services sector attract investorsother RGMs such as India (40%) and The sales, marketing and support sector L`] Zmkaf]kk k]jna[]k ^mf[lagf [gfljaZml]China (around 50%). attracted 141 projects, 54% of the */ g^ l`] k]jna[]k hjgb][lk$ l`] k][gf highest for services. Brazil has a mix of Function FDI projects FDI share Change Jobs created A;L$ ÕfYf[aYd k]jna[]k$ da^] k[a]f[]k Yf 2011 2011 vs. 2010 2011 2010 2011 real estate, hospitality and construction Sales, marketing & support 92 141 -, -+ +$-+( mf]j l`] meZj]ddY g^ Zmkaf]kk k]jna[]k& Business services 44 71 */ .) 3,218 Business services recorded a growth of 61% Design, development & testing 12 23 1 1* 6,091 in FDI projects during 2011 on account Customer contact center - 3 ) %,( 3,729 of increased perception of Brazil as a hot Technical support center 3 1 (&, %./ 206 ]klafYlagf ^gj Zmkaf]kk k]jna[]k& 9[[gjaf_ Maintenance & servicing 3 3 ) - 131 to a 2011 European Commission study, ICT & internet infrastructure 11 20 0 0* 3,791 Shared services center 1 - - %)(( - d]Yaf_ ^gj]a_f AL Õjek Y[[gmfl] ^gj Services total 171 262 100% 53% 20,696 40% of the industry’s revenues.Source: fDi Intelligence.Strategic functions: shaping the future of Brazil’s attractivenessBrazil still needs to improve on its kh]fk ) g^ alk ?<H gf j]k]Yj[` È `Yd^ l`] environment and government focus onattractiveness for strategic functions. ]n]dgh] ogjdÌk jYl]$ Zml Ydegkl gmZd] R&D functions. Brazil’s BNDES also supportsIn 2011, Brazil received only 25 projects the average in the rest of Latin America. [gehYfa]k oal` ÕfYf[af_ ghlagfk lg hjgegl]of this type, up from 19 in 2010. These innovation and R&D.[j]Yl] ,$11/ bgZk gj + g^ l`] lglYd L`]j] o]j] )+ ><A `]YimYjl]jk hjgb][lk><A bgZk af *())& L`] kdgo hY[] g^ ><A af :jYrad af *())$ mh ^jge / af *()(& Oal` Our survey results make it clear that Brazilgrowth into strategic functions is mainly klYZadalq af l`] hgdala[Yd ]fnajgfe]fl$ Yf is perceived as a highly attractive domestic[Ymk] Zq l`] dY[c g^ lgh eYfY_]e]fl improvement in infrastructure and living market with several foreign investorstalent, resulting from the country having conditions, more companies are expected setting up production facilities to cater tohistorically neglected to invest in education lg k]l mh `]YimYjl]jk af :jYrad& 9dkg$ Yk the growing demand in the country. SalesYf ljYafaf_ Z][Ymk] g^ alk gn]jj]daYf[] _dgZYd [gehYfa]k k]]c lg af[j]Yk] Ö]paZadalq Yf eYjc]laf_ g^Õ[]k jYfc k][gf Yk l`]k]on commodities. However, Brazil is now Zq hjgnaaf_ _j]Yl]j eYfY_]e]fl Ymlgfgeq afn]kle]flk ]fYZd] dg[Yd hjgm[lagf ^Y[adala]kfocusing on R&D and investing in training lg j]_agfYd g^Õ[]k$ :jYrad `Yk Yf ghhgjlmfalq to operate successfully in Brazil’s domesticYf ]m[Ylagf lg Z][ge] Y cfgof hdYq]j af lg YlljY[l egj] ><A `]YimYjl]jk hjgb][lk market. Foreign investors, however, do notl`ak Õ]d& 9[[gjaf_ lg The Economist,7 Brazil lg gn]jk]] Yf eYfY_] Zmkaf]kk gh]jYlagfk k]]e lg k`go Y ka_faÕ[Yfl afl]fl lg ]klYZdak`is the world leader in research on tropical across the Latin American region. `mZ dg[Ylagfk af :jYrad l`Yl ogmd hjgna]e]a[af]$ Zag]f]j_q Yf hdYfl Zagdg_q$ Yf g^^k`gj] Zmkaf]kk k]jna[]k gj J< ^mf[lagfk& The competition for FDI into strategic In order to attract such investment, Brazil7. “Science in Brazil — Go south, young scientist — An ^mf[lagfk oadd Z][ge] egj] afl]fk] oal` needs to take steps to create a push toward emerging power in research,” The Economist website, www.economist.com, accessed 30 April 2012. l`] af[j]Ykaf_ kgh`akla[Ylagf af l`] Zmkaf]kk high value-added services. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 17
    • A record yearFDI by sectorLeading sectors of FDI In transition Lagging behindœ ICT and manufacturing œ Financial services œ Real estate, hospitality andICT and manufacturing are the top two sectors Financial services attracted 35 FDI projects construction^gj fmeZ]j g^ ><A hjgb][lk af :jYrad YlljY[laf_ af *()) / g^ l`] lglYd!$ mh ^jge *( Brazil’s real estate, hospitality and construction105 and 94 FDI projects respectively, in hjgb][lk af *()(& =n]f l`gm_` ^gj]a_f ZYfck sector attracted 12 FDI projects, and created2011. The ICT sector emerged as the fourth `Yn] Z]]f ]klYZdak`af_ l`]aj hj]k]f[] af Y lglYd g^ ,$(/- bgZk af l`] [gmfljq af *())&dYj_]kl af l]jek g^ bgZ [j]Ylagf af :jYrad$ af Brazil, the country still remains dominated Although Brazil is growing as a leisure and*()) oal` )/$/*, bgZk& Afn]klgjk afl]j]kl] Zq ge]kla[ ZYfck km[` Yk AlY” MfaZYf[g$ Zmkaf]kk ]klafYlagf Zq oYq g^ ]n]flk$in manufacturing are pouring money into Bradesco and Banco do Brasil. conferences and conventions), the country]klYZdak`af_ l`]aj ^Y[adala]k lg [Yl]j ^gj Zgl` is yet to reach its full tourism potential.domestic and export demand. The sector œ Mining and metals The investment in this sector is expected tohas shown strength in terms of employment Mining and metals also recorded 35 projects, gain traction as Brazil prepares to host the_]f]jYlagf3 al [j]Yl] *)$0** bgZk af *())& Yf [j]Yl] l`] egkl bgZk Yl ,-$//0 af *())& FIFA World Cup in 12 cities in 2014 and the With one of the largest mineral repositories Summer Olympic Games in Rio de Janeiro inœ Business services in the world, this sector in Brazil provides 2016. However, of all the host cities, only RioBusiness services attracted 53 projects in strong prospects for foreign investors. ] BYf]ajg$ Kƒg HYmdg Yf ;mjalaZY Yj] o]dd*())$ [gfklalmlaf_ )( g^ l`] lglYd fmeZ]j prepared to accommodate the tourists duringof FDI projects, up from 8% in 2010. œ Automotive these sporting events, with other cities facingL`] jakaf_ k`Yj] g^ l`] Zmkaf]kk k]jna[]k Automotive attracted 33 FDI projects Y lglYd hjgb][l] ]Õ[al g^ `gl]d jggek& L`]sector evidences Brazil’s slow transition in Brazil in 2011, generating employment [`Ydd]f_] lg gn]j[ge] l`ak ]Õ[al oadd j]imaj]from a commodity-dependent country ^gj ).$+*/ h]ghd]$ l`] Õ^l` `a_`]kl af the industry to expand and adjust its capacity,to a services-led nation. the country. Buoyant consumer demand l`mk ]eYfaf_ ka_faÕ[Yfl afn]kle]flk&8 Yf l`] ]Ykq YnYadYZadalq g^ [j]al `Yn]œ Retail and Consumer Products led to the growth of the sector. œ Cleantech (RCP) :jYrad ak Zmadaf_ alk hgkalagf af l`] [d]Yfl][`L`] J;H k][lgj `Yk Z]]f jan]f Zq l`] œ Chemicals industry. It is the third-largest producercountry’s ever-increasing middle class and Brazil’s chemicals industry, which stands Yf [gfkme]j g^ Zaga]k]d af l`] ogjd&growing consumption power. In 2011, the seventh in the world, recorded 32 FDI projects Almost 50% of Brazils demand for energysector accounted for 9% of all FDI projects in 2011; the sector remains modest in terms ak e]l l`jgm_` j]f]oYZd] ]f]j_q kgmj[]k&Yf [j]Yl] l`] k][gf%egkl bgZk Yl *+$(-)& of foreign investment. However, FDI activity in the sector remained low with 11 projects.Top 15 sectors by FDI projects œ Energy Rank Sector Number of projects Share Change Jobs Value The energy sector attracted 8 projects in in 2011 2011 vs. created (US$m) 2010 2011 2010 2011 2011 2011, remaining low on the FDI radar for 1 ICT 69 )(- *) -* 17,724 14,780 fgo$ Zml oal` YZmfYfl gad Yf _Yk j]k]jn]k 2 Manufacturing 47 94 )1 )(( 21,822 4,678 and recent discovery of the pre-salt layer, it 3 Business services 29 -+ )( 0+ 2,043 687 hj]k]flk Za_ ghhgjlmfala]k af l`] dgf_ jmf& 4 Retail and consumer 41 44 1 / *+$(-) 6,872 products (RCP) œ Life sciences - Financial services 20 +- / /- 2,464 600 Life sciences recorded 8 FDI projects in 2011, 6 Mining and metals 18 +- / 1, ,-$//0 )0$1.- down from 15 projects in 2010. Brazil 7 Automotive 31 33 / . 16,327 6,034 would need to enhance its R&D culture 8 Chemicals 30 32 . / -$1-. 1,677 9 Transport and logistics 17 17 + ( 2,689 /*- to promote greater foreign investment in 10 Equipment 11 16 + ,- /$-)1 +/- the life sciences sector. 11 Real estate, hospitality 17 12 * %*1 ,$(/- 969 and construction œ Aerospace 12 Cleantech 13 11 * %)- /$).- 4,290 9]jgkhY[] j][gj] , ><A hjgb][lk af Zgl` 13 Energy 4 8 * )(( +$-)/ 2,047 *()( Yf *())$ Ydl`gm_` l`] fmeZ]j g^ 14 Life sciences )- 8 * %,/ /-* 108 bgZk [j]Yl] ][j]Yk] ^jge -,* af *()( )- Aerospace 4 4 ) ( 284 110 to 284 in 2011. Total 366 507 100% 39% 161,166 62,916Source: fDi Intelligence. 8. Sustainable Brazil, 2011, Ernst & Young, 2011.18 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Sector focusICT* Software & IT services; communications; semiconductorsFDI value and number of projects Number of jobs FDI projects (number) 17,724 FDI value (US$b) 105 69 14.8 8,571 53 7,827 49 47 10.6 6.4 3,621 2,907 2.4 1.3 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +52.2% FDI projects +106.8% No. of jobs +130.5% FDI valueICT in Brazil attracted 105 FDI projects Other government measures are alsoaf *())$ *) g^ l`] lglYd fmeZ]j af l`] eYbgj Zggkl]jk ^gj l`] k][lgj$ km[` Yk IBM Corporation (IBM)[gmfljq& L`] k][lgj [j]Yl] )/$/*, bgZk$ incentives including tax exemptions.the fourth highest of all industries in Brazil Already several foreign industry giants are US-based IBM has been in Brazil sincein 2011. hj]k]fl af :jYrad$ af[dmaf_ Lgk`aZY$ A:E$ 1917. The company provides end-to- HP, Accenture, Capgemini, Infosys and end solutions to several companies inBrazil’s ICT sector is the world’s seventh Tata Consultancy Services. the country. According to the Brazilianlargest and is the leader in Latin America. Association of Information TechnologyL`] FYlagfYd :jgYZYf HdYf$ gh]faf_ The telecoms market also has large, and Communication (Brasscom), thel`] [YZd] LN eYjc]l lg l]d]h`gf] [Yjja]jk ]klYZdak`] ^gj]a_f hdYq]jk km[` Yk company came top (by total revenue)and companies with foreign ownership Vivendi (France), Telefónica (Spain), of all IT-BPO exporters in Brazil in 2010.exceeding 49%, will increase demand for Telmex (Mexico) and TIM (Italy). In April 2012, IBM formed a strategicIT products and services. The Brazilian Brazil’s IT market has a distinct regional partnership with Brazilian businessGovernment’s targets for 2014, which structure, with most of the spending group EBX Group. Under the terms ofaf[dm] ]pl]faf_ ZjgYZYf Y[[]kk lg .0 Y[[gmfl] ^gj Zq Kƒg HYmdg Yf Jag ] l`ak Y_j]]e]fl$ A:E [Yf Y[imaj] *.of the population; launching 4G services Janeiro. Challenges persist, such as of SIX Automacao, a subsidiary of EBXin 80% of the metropolitan areas; and 100% high dependence on imported electronic Group, with a focus on the oil and gastelephony coverage in rural areas, will act components and a shortage of skilled operations sectors. The companiesas key drivers for infrastructure investments workforce. These challenges have put would also work together to launch agoing forward. Brazil on the 39th position in the 2011 Joint Industry Solutions Center at SIX IT Industry Competitiveness Index, Automacao. The center would Z]`af AfaY +,l`! Yf ;`afY +0l`!& undertake research programs focused on natural resources and sustainability. EBX Group would also outsource its IT operations to IBM for approximately US$1b until 2022. IBM, which operated l`jgm_` *+ ZjYf[` g^Õ[]k af *()($ plans to increase this number lg ,+ Zq *()-&* Source: Business Monitor International’s monthly regional report on political risk and macroeconomic prospects, Business Monitor International, March 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 19
    • A record year Sector focus Manufacturing* Engines & turbines; industrial machinery, equipment & tools; paper, printing & packaging; rubber; space & defense; textiles; wood products FDI value and number of projects Number of jobs FDI projects (number) 21,822 94 FDI value (US$b) 4.7 11,041 47 38 3.2 6,301 18 1.4 3,539 12 0.7 2,169 0.6 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +100% FDI projects +97.6% No. of jobs +46.4% FDI value The manufacturing sector in Brazil Competitive manufacturers, with export attracted 94 FDI projects in 2011, [YhYZadalq$ Yj] Yf aehgjlYfl ]d]e]fl g^ ArcelorMittal )1 g^ l`] lglYd fmeZ]j af l`] [gmfljq& l`] qfYeake Yf klYZadalq g^ l`] :jYradaYf L`] k][lgj [j]Yl] *)$0** bgZk$ l`] l`aj economy. BASF, Siemens, ArcelorMittal Luxembourg-based ArcelorMittal highest of all the industries in Brazil and Doosan are the players that have (Arcelor) operates in Brazil through its af *())& Gmj kmjn]q [gfÕjek l`] invested in the country’s manufacturing subsidiary ArcelorMittal Brasil S.A. attractiveness of Brazil as a location for sector during 2011. and is the largest steel producer in the manufacturing activities with 52% of country. The company has a strong respondents seeking investment into 9dl`gm_` :jYradÌk [gkl g^ dYZgj ak `a_`]j hj]k]f[] af :jYrad ^gj dgf_ Yf ÖYl kl]]d& setting up a factory or production unit than that in other emerging economies, Arcelor’s Brazilian unit plans to boost in the country. such as China and India, it is still competitive its output of iron ore, a key ingredient in comparison with developed market ^gj eYcaf_ kl]]d$ Zq .- lg /&) eaddagf The President of Brazil Dilma Rousseff’s economies such as the US, Japan and tons in 2013. Through its Andrade and Bigger Brazil Plan, launched in August the Eurozone. Brazil faces threats from Serra Azul mines in Brazil’s state of 2011, aims to increase productivity and the developed world’s “manufacturing” Minas Gerais, Arcelor supplies iron ore Zggkl l`] jgd] g^ afmkljaYd eYfm^Y[lmjaf_ of high-tech goods as well as from to its own steel plants in Brazil and also in the country’s economy. Its key measures l`] dgo%[gkl Yf kcadd] dYZgj g^ gl`]j sells it to local customers. The move is af[dm] lYp Zj]Yck gf ]phgjlk Yf Y emerging nations. These factors, coupled part of the company’s global strategy reduction of the 20% welfare tax to 0% for with appreciation of Brazil’s currency, lg Zggkl k]d^%km^Õ[a]f[q af ajgf gj] sectors that are sensitive to the exchange have increased the import of manufactured production. Arcelor is also in talks jYl] Yf Yj] dYZgj afl]fkan] È km[` Yk goods into the country. In addition, a with Brazilian steelmaker Usinas apparel, footwear, furniture and software. [gehd]p lYp kqkl]e Yk lg l`] a^Õ[mdla]k Siderurgicas de Minas Gerais SA to set L`] hgda[q Ydkg eYc]k :F<=K j]khgfkaZd] ^Y[] Zq l`] eYfm^Y[lmjaf_ k][lgj& up a consortium and make a joint bid ^gj ÕfYf[af_ affgnYlagf Yf afn]kle]fl for an iron ore port area — Area do Meio mf]jlYc]f Zq [gehYfa]k& port — in the Rio de Janeiro state. * Source: “Energy in Brazil — Ethanol’s mid-life crisis,” The Economist website, www.economist.com, accessed 30 April 2012; “U.S. sugar prices fall as supplies improve –Domino,” The Reuters website, uk.reuters.com, accessed 28 April 2012; Sustainable Brazil: horizons of industrial competitiveness report, April 2011, Ernst & Young, 2011.20 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Sector focusBusiness services* Business services; leisure & entertainment FDI value and number of projects Number of jobs FDI projects (number) 4,316 FDI value (US$b) 53 37 2,484 2,250 29 2,043 23 0.7 9 0.2 0.2 353 0.1 0.1 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +82.8% FDI projects -9.2% No. of jobs +309.8% FDI value:jYradÌk Zmkaf]kk k]jna[]k k][lgj YlljY[l] funding for companies focusing on R&D, such as HCL, Wipro, Teleperformance,53 projects in 2011 with an FDI value Ydgf_ oal` Y kmj_af_ fmeZ]j g^ l][`fgdg_q Genpact and Sitel, have their customerlglYdaf_ MK(&/Z$ [j]Ylaf_ *$(,+ bgZk af Yf Zmkaf]kk hYjck Y[jgkk l`] [gmfljq$ contact centers in the country.the country. The FDI projects in the have provided further incentives forsector were directed primarily to ^gj]a_f Õjek lg k]l mh l`]aj g^Õ[]k af @go]n]j$ kmhhdq k`gjlY_] g^ `a_`%imYdalqfunctions such as sales, marketing and Brazil to focus on local customers and on properties in São Paulo, Rio de Janeirosupport; education and training; ICT and serving the wider Latin American market. and other major state capitals has led tointernet infrastructure; and customer sky-high lease prices in these areas,contact centers. The country has emerged as an important raising a concern for international customer contact center market for [gehYfa]k hdYffaf_ lg ]klYZdak` l`]aj ZYk]Business services are core to Brazil’s [gehYfa]k Y[jgkk l`] _dgZ]& Kƒg HYmdg$ in Brazil. Rio de Janeiro has the fourth-economy since the country acts as a major Rio de Janeiro and Minas Gerais are the `a_`]kl g^Õ[] d]Yk] hja[] af l`] ogjd$ YfZYk] ^gj [gehYfa]k oal` gh]jYlagfk af DYlaf three most prominent regions for contact São Paulo the eighth-highest.America. Tax incentives and increased []fl]j ]klYZdak`e]flk af :jYrad& ;gehYfa]k* Source: “Dark side of Brazil’s rise,” The Wall Street Journal website, online.wsj.com, accessed 6 May 2012; “Brazil sambas onto offshore outsourcing stage,” Cio.com website, www.cio.com$ Y[[]kk] - EYq *()*3 EYjc]lZ]Yl È :jYrad$ *())$ Cushman & Wakefield, 2011. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 21
    • A record year Sector focus Retail and consumer products (RCP)* Beverages; consumer electronics; consumer products; food & tobacco; textiles (for retail) FDI value and number of projects Number of jobs FDI projects (number) FDI value (US$b) 44 23,051 41 28 15,471 24 11,782 11,217 6.9 14 4.1 3.6 3.1 4,350 1.3 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +7.3% FDI projects +49.0% No. of jobs +91.9% FDI value The RCP sector in Brazil attracted 44 FDI company FEMSA and France’s L’Oréal are hjgb][lk af *())$ 1 g^ l`] lglYd fmeZ]j the key players in Brazil’s RCP sector. LOréal SA in the country. The sector created 23,051 Many RCP companies such as Nestlé, bgZk$ l`] k][gf `a_`]kl g^ Ydd afmklja]k af Danone and Kraft Foods have announced French cosmetics group LOréal SA Brazil. plans to penetrate the Brazilian market (L’Oréal) established its subsidiary further. Leading players such as Carrefour af :jYrad af )1-1& DGj†Yd :jYrad L`] J;H k][lgj ak jan]f Zq l`] [gmfljqÌk of France and Wal-Mart of the US have a offers a complete portfolio of brands in increasing middle-class population. strong presence in the country. Online the country through various distribution Currently, more than 50% of Brazilians marketing, with the growth of the channels. Brazil is L’Oréal’s largest Z]dgf_ lg l`] ead]%[dYkk ; [dYkk È oal` ]%[gee]j[] afmkljq$ `Yk Ydkg [gfljaZml] market for hair-care products Y ^Yeadq af[ge] af l`] jYf_] g^ MK/-( lg to the RCP industry in Brazil. The majority in the world. LOréal plans to double US$3,229 per month). Almost 40 million of RCP investments are concentrated in alk kYd]k af :jYrad Yf Y -( eaddagf :jYradaYfk [daeZ] lg l`ak [dYkk Z]lo]]f the Southern region of the country; [mklge]jk af l`] [gmfljq Zq *()- 2003 and 2011. Brazil’s economically however, with upcoming growth in the by undertaking a host of measures that active population (age group 20–54 Northern part, companies plan to diversify include offering personalized makeup q]Yjk! `Yk af[j]Yk] Zq )*&+ lg j]Y[` their investments. Although we see a services, strengthening retail channels 101.6 million in 2011 from 90.5 million in jgZmkl J;H k][lgj af :jYrad$ eYfq to compete with direct sellers and 2003. Brazil is undergoing a strong retail [`Ydd]f_]k kladd ]pakl& @a_` lYp]k `Yn] Z]]f investing in innovation to tailor expansion. It was ranked 1st in the 2011 imposed on imports to foster local its offerings to meet the needs of local 9&L& C]Yjf]q ?dgZYd J]lYad <]n]dghe]fl production. Logistics and infrastructure customers. LOréal Brazil also plans Af]p$ mh ^jge +(l` af *((*& ;`ad]%ZYk] Zglld]f][ck af :jYrad [gflafm] lg aehY[l an investment of US$39m for j]lYad]j ;]f[gkm$ E]pa[gÌk Z]n]jY_] fgl gfdq J;H Zml gl`]j k][lgjk Yk o]dd& the construction of the Latin American Research and Innovation Center in Rio de Janeiro by 2014. * Source: Rapid-growth markets forecast, Ernst & Young, July 2012; “FDI in multi-brand retail: The next big thing in reforms, but roadblocks persist,” Knowledge@Wharton website, knowledge.wharton.upenn.edu, accessed 10 May 2012.22 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Sector focusFinancial services*FDI value and number of projects Number of jobs FDI projects (number) FDI value (US$b) 4,152 35 33 2,464 19 20 12 1,050 767 1.7 581 0.2 0.3 0.6 0.6 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +75.0% FDI projects +134.7% No. of jobs -3.3% FDI value:jYradÌk ÕfYf[aYd k]jna[]k k][lgj YlljY[l] l`]k] af[dm] MK%ZYk] :Yfc g^ 9e]ja[Y$+- ><A hjgb][lk af *())$ l`] Õ^l` egkl g^ Citigroup and Goldman Sachs Group; Banco Santander S.A.any sector in the country, and created Germany’s Deutsche Bank; Switzerland-*$,., bgZk È Yf af[j]Yk] g^ )+,&/ gn]j ZYk] ;j]al Kmakk]3 Yf ;`afYÌk @K:; Banco Santander (Brasil) S.A.2010. The total FDI value of these projects ZYfc& @go]n]j$ ^gj]a_f ZYfck ^Y[] kla^^ (Santander), a subsidiary of Spainswas US$600m in 2011. competition in the Brazilian market, Grupo Santander, entered the Brazilian o`a[` ak [mjj]fldq geafYl] Zq ge]kla[ eYjc]l af )1-/ l`jgm_` Yf gh]jYlaf_>gj]a_f ZYfck `Yn] Z]]f ]klYZdak`af_ ZYfck km[` Yk AlY” MfaZYf[g$ :jY]k[g agreement with Banco Intercontinentaltheir presence in the country to cater to and Banco do Brasil. do Brasil S.A. Through a series ofthe new generation of consumers who acquisitions coupled with an organicYj] k]]caf_ [j]al ^gj Zmkaf]kk]k$ j]Yd :jYradÌk kgh`akla[Yl] ÕfYf[aYd kqkl]e Yf growth strategy, Santander has grown toestate and goods among other things. structured investment funds industry become the biggest foreign bank<jan]f Zq alk aehj]kkan] _jgol` Y[jgkk `Yk Ydkg ]fYZd] l`] afÖgo g^ ><A aflg in Brazil today and the sixth-largest bankk][lgjk$ :jYrad `Yk Z][ge] Yf aehgjlYfl the nation. The country’s insurance sector in the country by total assets. Santander]klafYlagf ^gj afn]kle]fl ZYfck ^g[mkaf_ `Yk Z]]f gh]f lg ^gj]a_f afn]klgjk kaf[] has a strong footprint in the country withgf af[j]Ykaf_ l`]aj j]n]fm]k Zq lYj_]laf_ )11.$ oal` l`] eYbgjalq g^ l`] MK Õjek +$//- g^Õ[]k Yf k]jna[] hgaflk$the rising investor class. As a result, represented through joint venture )0$,)1 9LEk Yf *-&+ eaddagfk]n]jYd d]Yaf_ _dgZYd afn]kle]fl ZYfck arrangements. [mklge]jk& :jYrad Y[[gmfl] ^gj *0`Yn] ]klYZdak`] l`]aj :jYradaYf mfalk3 g^ KYflYf]j ?jgmhÌk hjgÕlk af *()) È ahead of Spain, the UK and Mexico — making Brazil a strategic market for the group. Santander’s goals for the Brazilian market include adding 100 to 120 branches per year during 2011 to 2013, becoming the number one bank in customer satisfaction by 2013 and capitalizing on its global branding initiatives to become one of the top three banks in Brazil by 2013. The bank also aims to achieve a revenue _jgol` Z]lo]]f ),Ç). Yf lg ]phYf f]l hjgÕl Zq )- gf Yn]jY_] af l`] Õk[Yd years 2012 and 2013.* Source: Viewpoint: Brazil in focus, September 2011, Ernst & Young, 2011. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 23
    • A record year Sector focus Mining and metals* Mining and metals industry FDI value and number of projects Number of jobs FDI projects (number) 35 45,778 FDI value (US$b) 35,227 21 27,617 24,929 18 16 14 23.0 15,722 16.6 19.0 14.3 5.7 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +94.4% FDI projects +30.0% No. of jobs +32.6% FDI value The mining and metals sector attracted the Southeast and South regions, with +- ><A hjgb][lk af *())$ / g^ l`] lglYd the Southeast having the largest share BHP Billiton fmeZ]j af l`] [gmfljq& L`] k][lgj [j]Yl] ,+!$ ^gddgo] Zq l`] Kgml` *,!$ ,-$//0 bgZk$ l`] `a_`]kl af l`] [gmfljq& the Northeast (16%), the Midwest (12%) BHP Billiton (BHP) formed a joint Brazil has one of the world’s largest and the North (6%). The huge untapped venture (JV) named Mineração Rio do mineral repositories and hosts the world’s mineral resources repository in the Amazon Fgjl] EJF È af o`a[` al `Yk Y ),&0 sixth-largest mining production. provides ample prospects for exploitation. share), with a bauxite miner, in Brazil The Government has developed the in 1976; MRN commenced operations Although Brazil’s mining sector was Manaus Free Trade Zone, a free trade area in 1979. BHP subsequently expanded Y^^][l] Zq l`] *((0 ÕfYf[aYd [jakak$ that offers special tax incentives to projects its presence in the country through JVs. [gehYfa]k `Yn] Z]]f af[j]Ykaf_ for the Amazon region. BHP aims to increase its presence in investment since then. Brazil holds :jYrad l`jgm_` alk -(2-( ajgf gj] eafaf_ leadership positions in the production The National Mining Plan 2030 foresees JV Samarco Mineração SA (Samarco). g^ nYjagmk [geegala]k È al ak l`] ogjdÌk afn]kle]flk g^ YhhjgpaeYl]dq MK*/(Z In 2011, Samarco commenced a dYj_]kl hjgm[]j g^ fagZame3 k][gf% and threefold increase in gold, MK+&-Z ]phYfkagf hjg_jYe largest producer of iron ore and tantalite; ajgf Yf [ghh]j gmlhml Zq *(+(& Jakck to construct a fourth pellet plant, a new l`aj%dYj_]kl hjgm[]j g^ ZYmpal]3 ^Y[] Zq l`] e]lYdk Yf eafaf_ k][lgj concentrator and a third slurry pipeline Yf Õ^l`%dYj_]kl hjgm[]j g^ [ghh]j$ are lack of infrastructure, shortage of in the country. In 2011, BHP also tin and kaolim. skilled manpower, complex regulations, signed a letter of intent with the state afkm^Õ[a]f[q g^ _]gdg_a[Yd eYhhaf_ YlY government of Minas Gerais in Brazil L`] eafaf_ k][lgj af :jYrad ak jmf Zq Y eap g^ and overreliance on China as the primary to invest US$2.4b in an iron ore Zgl` _dgZYd Yf ge]kla[ hdYq]jk$ af[dmaf_ export market for iron ore. Brazil’s huge production project. The project, Vale (Brazil), MMX (Brazil), BHP Billiton dependence on commodity exports also expected to become operational (British-Australian multinational), Rio Tinto eYc]k l`] [gmfljq nmdf]jYZd] lg l`] jakck in 2017, would employ 1,100 people (British-Australian multinational) and Ykkg[aYl] oal` l`] ngdYlad] _dgZYd and generate 1,100 indirect jobs. Barrick (Canada). The mining companies commodity markets. in Brazil are largely concentrated in * Source: “Brazil to triple gold, iron, copper output by 2030,” Reuters website, uk.reuters.com, accessed 10 May 2012.24 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Sector focusChemicals* Chemicals; plasticsFDI value and number of projects Number of jobs FDI projects (number) 32 FDI value (US$b) 30 7,119 5,956 18 4,876 14 10 1.8 1.7 1,584 1,719 0.7 0.3 0.5 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +6.7% FDI projects +22.1% No. of jobs +126.4% FDI valueThe chemicals sector in Brazil attracted [mdlmj]$ afn]kle]fl `Yk Z]]f ^Yj Z]dgo One of the key goals of this program32 FDI projects in 2011, 6% of the total the needs of the country, resulting in ak lg eYc] :jYrad Y _dgZYd d]Y]j af _j]]ffmeZ]j g^ ><A hjgb][lk af l`] [gmfljq$ Y [`]ea[Yd hjgm[l ljY] ]Õ[al l`Yl chemicals. To tap the opportunity in[j]Ylaf_ -$1-. bgZk& _j]o ^jge MK)&*Z af )11( lg MK*.&-Z the green chemical industry, international in 2011. The 2010 National Pact for the hdYq]jk km[` Yk MK%ZYk] <go ;`]ea[YdBrazil’s chemicals industry is the seventh ;`]ea[Yd Afmkljq$ Yf afalaYlan] Zq l`] and Japan’s Mitsui have formed a JVlargest in the world. Production of chemicals Brazilian Association of the Chemical lg ]klYZdak` Yf afl]_jYl] Zaghgdqe]jin Brazil supports agriculture, mining, oil Afmkljq 9:AIMAE!$ o`a[` j]hj]k]flk operation, using sugarcane ethanolextraction, industrial, transport, health care more than 140 chemical producers lg hjgm[] ZaghdYkla[k ^gj hY[cY_af_&and packaging sectors. comprising around 85% of industrial <]khal] Z]af_ gf] g^ ogjd d]Y]jk af chemical production in the country, has [`]ea[Ydk$ af^jYkljm[lmj] Zglld]f][ck$The demand for chemicals in Brazil is met outlined steps to strengthen the industry. huge electricity costs (Brazil has thethrough net imports as investment in this It aims to promote competitiveness and third-highest power costs in the world),khY[] `Yk lYc]f Y ZY[c k]Yl& 9dl`gm_` kmklYafYZd] ]n]dghe]fl g^ l`] [`]ea[Yd high raw material prices, taxes, interest:jYrad `Yk l`j]] Za_ fYlagfYd [`]ea[Yd afmkljq Zq Zggklaf_ afn]kle]fl Yf rates and an overvalued currency continue[gehYfa]k$ Yf eYfq dYj_] o]dd%]klYZdak`] overcoming challenges that hamper to pose threats to Brazil’s position at themultinationals with an integrated Brazilian new investments. ^gj]^jgfl g^ l`] _dgZYd [`]ea[Ydk eYjc]l&* Source: “Bioplastics in Brazil: Beyond the Green Speech,” Frost & Sullivan website, www.frost.com, accessed 16 May 2012; “Exclusive: Brazil to cut electricity taxes to boost economy,” Reuters website, www.reuters.com, accessed 16 May 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum *-
    • A record year Sector focus Automotive* 9mlgeglan] gja_afYd ]imahe]fl eYfm^Y[lmj]jk G=E!3 Ymlgeglan] [gehgf]flk FDI value and number of projects Number of jobs FDI projects (number) 33 19,113 FDI value (US$b) 31 28 16,418 16,502 16,327 20 6.9 7,511 5.8 6.0 11 4.9 4.1 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: +6.5% FDI projects -14.6% No. of jobs -12.9% FDI value The automotive sector in Brazil attracted The Government exempted 18 automakers ++ ><A hjgb][lk af *())$ / g^ l`] lglYd from the US, EU, Japan and Brazil from Fiat S.p.A. fmeZ]j af l`] [gmfljq& L`] k][lgj [j]Yl] hYqaf_ Y `a_`]j lYp gf Ymlgk af >]ZjmYjq ).$+*/ bgZk$ l`] Õ^l` `a_`]kl g^ Ydd 2012. Several auto industry giants Fiat S.p.A. (Fiat), an Italian automobile sectors. Brazil is the world’s fourth-largest are present in Brazil; including Italian manufacturer, has been present in the [Yj eYjc]l Yf l`] Za__]kl Ymlg eYjc]l automaker Fiat, Germany’s Volkswagen, Brazilian market since 1976 through in Latin America. Japans Nissan, and US automakers its subsidiary Fiat Automóveis. Fiat has General Motors and Ford Motor Company. been Brazil’s car market leader for the L`] jgZmkl h]j^gjeYf[] g^ l`] k][lgj `Yk Brazil’s rapidly expanding consumer class last 10 years, selling cars catering to Z]]f khmjj] gf Zq Y [geZafYlagf g^ lYp Yf dgo [Yj ]fkalq )+/ [Yjk h]j different consumer segments. Zj]Yck Yf ZmgqYfl ge]kla[ ]eYf& )$((( h]ghd]!$ k`gmd ^mjl`]j Zgdkl]j According to Brazils automotive Klaemdmk e]Ykmj]k mf]jlYc]f Zq the demand for cars in the country. distribution federation Fenabrave, the Government of Brazil, including Fiat Uno became the best-selling car the Real Plan that created inexpensive @go]n]j$ Yf afÖmp g^ [`]Yh aehgjlk ^jge in Brazil in March 2012, registering ÕfYf[af_ ghhgjlmfala]k Yf l`] :a__]j China and Korea threaten Brazil’s auto total sales of 23,109 cars. Fiat plans to Brazil Plan that extended a package industry. To mitigate these challenges, bolster investments in Brazil to the tune g^ dgYfk lg ÕfYf[] l`] ogjcaf_ [YhalYd g^ the Government recently raised taxes g^ MK-&1Z mjaf_ *()) lg *(), lg small and medium-sized car parts makers on imported cars and plans to launch develop new products, processes and to help support local production, have a graded-tax-credit program effective technologies as well as to expand its resulted in huge growth for the sector. ^jge *()+ lg *()/ lg _jYfl Y hjghgjlagfYd production capacity. The company aims Also, the Government has stepped up tax credit corresponding with the amount to sell more than one million cars its efforts to encourage more FDI in car g^ kljYl]_a[ dg[Yd [gfl]fl mk] Zq annually in Brazil by 2014. manufacturing and production of the manufacturer. Ymlgeglan] [gehgf]flk Zq _anaf_ lYp exemptions to companies that have a local production. * “Car parts makers: Vehicle-buying surge in Brazil fuels component sector,” The Financial Times website, www.ft.com, accessed 12 May 2012; “Eighteen automakers to be eligible for lower taxes, says Brazilian government,” IHS Global Insight Daily Analysis, 1 February 2012, via Dow Jones Factiva, © 2012, IHS Global Insight Limited.26 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Sector focusCleantech* Alternative and renewable energyFDI value and number of projects Number of jobs 7,165 FDI projects (number) 13 FDI value (US$b) 11 4,836 4,532 8 4.3 3,474 6 3.8 3.0 3.5 1,462 2 0.8 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011Source: fDi Intelligence. Source: fDi Intelligence. Growth 2011 vs. 2010: -15.4% FDI projects +58.1% No. of jobs +14.1% FDI valueThe cleantech sector in Brazil attracted However, the Government of Brazil has11 FDI projects in 2011, 2% of the total Yffgmf[] l`Yl al oadd afb][l MK+0Z aflg AmyrisfmeZ]j af l`] [gmfljq$ [j]Ylaf_ /$).- the ethanol sector over the nextbgZk& :jYrad `Yk )-&+?O g^ j]f]oYZd] ^gmj q]Yjk af l`] ^gje g^ kmZkaar] [j]al US-based Amyris, an integrated renewableenergy installed capacity and is ranked to revive ethanol production and to attract products company, has been investing in)(l` _dgZYddq& investments in the sector. Under its Brazil’s cleantech industry. The company National Cleantech Strategy 2020, conducts its Brazilian operations for theThe country meets almost 50% of its Brazil aims to triple ethanol production. manufacture and trade of products through]f]j_q ]eYf l`jgm_` j]f]oYZd] ]f]j_q Amyris Brasil S.A. (Amyris Brasil),sources. Ethanol forms a critical part of L`] kljYl]_q Yaek lg af[j]Yk] j]f]oYZd] its majority-owned subsidiary. AmyrisBrazil’s cleantech industry since 40% ]f]j_q _]f]jYlagf Zq ))&-?O Zq *()1$ Brasil has been expanding its productiong^ l`] Ymlg Ö]]l Yf 1( g^ Ydd f]o [Yjk with a 10-fold increase in wind and capacity in Brazil by working with thekgd af :jYrad Yj] Ö]p%^m]d$ _Ykgdaf] ZageYkk ]f]j_q _]f]jYlagf& Al Ydkg Yaek lg country’s sugar and ethanol manufacturersZd]f] oal` ]l`Yfgd& L`] [gmfljq ak have smart meters installed in every home to produce biofuels and biochemicals.the second-largest ethanol producer Zq *(*( Yf lg YllYaf Y ,( j]m[lagf The company has adopted a capital lightin the world after the US. Shell, BP, Bunge, af [YjZgf ]eakkagfk& :jYrad oadd f]] lg asset model wherein the producers investDK1$ <go Yf 9eqjak Yj] ka_faÕ[Yfldq diversify its energy mix to tackle the a substantial portion of the sum required toafn]klaf_ af l`] :jYradaYf Zag^m]d afmkljq& challenges from deforestation, population establish the Amyris facility, and AmyrisJ][]fldq$ kge] [gf[]jfk `Yn] Z]]f jYak] displacement and power disruption. provides technology, plant designs andaround Brazil’s domestic supply shortage technical expertise. Amyris plans to investof ethanol following an output drop. YhhjgpaeYl]dq MK-Z af :jYrad Zq *(*( af partnership with local companies. Amyris is scaling up its renewable farnesene production in Brazil, branded as Biofene. Amyris Brasil has entered into agreements oal` :jYradaYf Õjek MkafY KYg EYjlaf`g$ Paraíso Bioenergia ETH Bioenergia, and Usina Alvorada to produce Biofene from 2012 to 2014. The company also has a partnership with Cosan to develop, produce and sell renewable base oils for the lubricants market.* “Brazil plans $38 bln sweetener to revive ethanol sector,” Reuters website, www.reuters.com, accessed 18 May 2012; “Brazil ethanol drive falters on domestic supply shortage,” Bloomberg website, www.bloomberg.com, accessed 18 May 2012; Cleantech matters: Seizing transformational opportunities, Global cleantech insights and trends report 2011, Ernst & Young, 2011. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 27
    • A record yearWhere to: Southeast leads FDI,Northeast shows promise for the future:jYrad ]p`aZalk a^^]jaf_ [`YjY[l]jakla[k egkl aehgjlYfl ][gfgea[ `mZk$ gl`]j [ala]k oal` Y k`Yjh jgh gZk]jn] af YoYj]f]kkin each of its regions. The Southeast have also started to attract foreign investors’ for any other location in Brazil. A staggeringand South lead the country in terms of attention. The 2014 FIFA World Cup, set 25% of all companies that have not yetinfrastructure development and educational to take place in 12 Brazilian cities, will also invested in Brazil cannot point to anyinstitutions. To diversify investments and promote the integration of investments kh][aÕ[ dg[Ylagf l`Yl ogmd Z] YlljY[lan]economic development across the nation, in its various cities. However, corruption in Brazil, and the vast majority is completelythe Government has therefore introduced Yf Zmj]Ym[jY[q j]eYaf Yk c]q [`Ydd]f_]k af unaware of even the largest tier-two citiesvarious incentives for the Northeast and many cities. within the country. For Brazil to succeedNorth regions. in spreading economic development Our survey results also demonstrate egj] ]n]fdq Y[jgkk l`] [gmfljq$ al oadd Z]Brazil has started to witness FDI across all the focus of foreign investors on the large eYfYlgjq lg ogjc gf hjgÕdaf_ alk la]j%logl`] j]_agfk$ d] Zq alk ]^^gjlk lg ][]fljYdar] metropolitan areas in the Southeast. cities and to inform and educate foreigninvestments and workforce. While São Paulo and Rio de Janeiro remain the top afn]klgjk YZgml ghhgjlmfala]k gmlka] g^São Paulo and Rio de Janeiro remain the priority for nearly 80% of the respondents, Rio de Janeiro and São Paulo.Southeast and South regions still remain investors’ priorityœ Southeast9 œ São Paulo œ SouthL`] Kgml`]Ykl ak l`] egkl YlljY[lan] j]_agf São Paulo, the largest city in Brazil, has L`] Kgml` j]_agf `Yk Ydkg Z]]f Y ^g[mkin Brazil with cities such as São Paulo created a strong position in the industrial, Yj]Y ^gj afn]kle]flk kaf[] al g^^]jk imYdalqand Rio de Janeiro gaining the most [gee]j[aYd$ ÕfYf[aYd$ Yjlk Yf ]fl]jlYafe]fl infrastructure. It attracted 115 projectsattention. The Southeast region attracted Yj]fYk& :]ka]k Z]af_ Y dYj_] afmkljaYd ZYk]$ Z]lo]]f *((/ Yf *())$ [j]Ylaf_ egj]1() hjgb][lk Z]lo]]f *((/ Yf *())$ al ak Ydkg l`] ÕfYf[aYd []fl]j g^ :jYrad& Jag l`Yf ,0$((( bgZk& K][lgjk af[dmaf_[j]Ylaf_ egj] l`Yf *-($((( bgZk Yf de Janeiro is the second-most important automotive, manufacturing and ICT areaccounting for more than 55% of FDI Brazilian city, having foreign interest in ICT, of interest to foreign investors. Largeprojects. The projects are mainly directed manufacturing, tourism and energy sectors. European companies such as Renault andlgoYj A;L$ eYfm^Y[lmjaf_$ Zmkaf]kk Another city in the region, Campinas, has NgdckoY_]f `Yn] ]klYZdak`] hj]k]f[]services and retail sectors. The Southeast emerged as the technology city with sound in the region. Local government initiatives[gfljaZml]k egj] l`Yf -( g^ l`] [gmfljqÌk IT, engineering and electronics infrastructure; in the development of the technology?<H& L`] j]_agf Ydkg `Yk YnYadYZadalq g^ Yf ]^Õ[a]fl ljYfkhgjl kqkl]e3 Yf hjgpaealq afmkljq Yj] ]ph][l] lg Zggkl hjanYl]skilled manpower as important universities to suppliers. The presence of large investment in the region. The cities ofare located here. multinationals in Campinas, such as Bosch, Porto Alegre and Florianópolis have Hewlett Packard and Dell, is evidence of already created a strong image as9. fDi Intelligence. its dominant position in the ICT sector. technology destinations. FDI inflows by destination city Rank Region City Number of projects Change Infrastructure 2011 vs. development 2010 2011 Share in 2010 FDI 2011 1 Southeast São Paulo 93 134 *. ,, + 2 Southeast Rio de Janeiro 23 43 0 0/ + 3 South Curitiba - 11 * )*( - 4 Southeast Campinas 8 7 ) %)+ + - South Porto Alegre 3 - ) ./ - 6 North Manaus 8 - ) %+0 - 7 Southeast Taubate 1 4 ) +(( + 8 Northeast Salvador 4 3 ) %*- - 9 Northeast Recife 3 3 ) ( - 10 Southeast Pindamonhangaba - 3 ) ( + 11 Others 218 289 -/ ++ Total 366 507 100% 39% Source: fDi Intelligence. +: Well-developed infrastructure / -2 Af^jYkljm[lmj] Zglld]f][ck&28 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • FDI projects by region North - 11 12 Northeast - 21 23 œ Many local governments in the North Yf Fgjl`]Ykl g^ :jYrad g^^]j ka_faÕ[Yfl incentives to attract businesses to their regions. Incentives include deferment or reduction of the state-based value-added Midwest - tax (VAT), free land or free building 9 11 Southeast + leases and exemption from municipal 201 278 service tax (ISS). 2010 2011+ Well-developed infrastructure- Infrastructure bottlenecks Source: fDi Intelligence. South + Fgl]2 L`] eYh ]fgl]k hjgb][l fmeZ]jk& 30 39 Region of 144 projects was not specified.Emerging Brazil: Northeast and North regions Midwestœ Northeast Novartis, Unilever and InBev.10 Other The region has not fared well in attractingThe Northeast region has historically examples of development in the Northeast foreign investments. Only 38 projectsZ]]f dgo gf l`] afn]kle]fl daklk g^ ^gj]a_f region include the recent announcement o]j] j][gj] Yf **$0-+ f]o bgZk o]j]afn]klgjk kaf[] al `Yk Z]]f hjgf] lg hgn]jlq Zq >aYl g^ alk hdYf lg afn]kl MK)&/0Z af [j]Yl] Z]lo]]f *((/ Yf *())& @go]n]j$and poor economic development. However, an automotive OEM manufacturing project Brasilia, the capital city of Brazil, stillwith the launch of various social welfare af l`] H]jfYeZm[g klYl] Yk o]dd Yk af offers a potential investment climate withprograms (such as Bolsa Família), the the construction of a West-East railway demand for consumer goods and servicessituation is gradually improving. The region and a freeway. Z]af_ jan]f Zq l`] [alqÌk hghmdYlagf l`Yl akYlljY[l] 1+ afn]kle]fl hjgb][lk Z]lo]]f [`YjY[l]jar] Zq h]ghd] oal` `a_` h]j [YhalY*((/ Yf *())$ [j]Ylaf_ egj] l`Yf œ North income.-/$((( bgZk$ eYafdq af l`] eYfm^Y[lmjaf_ The North region is similar to the Northeastand metals and mining sectors. The in economic development and has thereforeexpansion of industrial complexes in lacked investors’ interest. The regionSuape is one of the major growth paths attracted just 48 investment projectsfor the Brazilian Northeast region. State Z]lo]]f *((/ Yf *())$ [j]Ylaf_ Yjgmfgovernments in the Northeast region of ,*$((( bgZk& @go]n]j$ l`] j]_agf `gh]k:jYrad `Yn] Z]]f afn]klaf_ kmZklYflaYddq to derive foreign commitments from thein infrastructure projects, thus enhancing *(), >A>9 Ogjd ;mh Z][Ymk] EYfYmk ak Yfinvestment prospects for international integral part of it.companies. Demand from more than 55 10. “Brazil: country at a glance,” The World Bank website,million Brazilians residing in the region accessed 19 May 2012; “Brazil: Confidence is the keyword,”and fast growth has attracted several Forbes website, www.forbescustom.com, accessed 19 May 2012; “Brazil’s north-east: Catching up in a hurry” Themultinationals. These include Kraft Foods, Economist website, www.economist.com, accessed 19 May 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 29
    • A record yearWhere from:Brazil’s FDI investorsThe US, Japan and a few of the European countries, including the UK, Germany and Spain, lead the FDI investmentactivity in Brazil. This can be attributed to their historical investment and trade agreements with Brazil. Also, the country’sproximity to other Latin American and North American markets makes Brazil more likely to become a key investmentdestination in the near to mid term.FDI inflows by source country Rank Country FDI projects Change Value Jobs created 2011 vs. 2010 (US$m) 2011 2011 2010 2011 Share in FDI 2011 1 United States 104 149 *1 ,+ )*$+-0 +-$)1- 2 United Kingdom 20 ,- 1 )*- 12,248 21,040 3 Spain 36 37 / + 4,483 7,660 4 Germany 33 36 / 1 +$(,- 8,678 - Japan 23 36 / -/ ,$1-, 14,069 6 France 18 26 - ,, 4,899 13,704 7 Switzerland 12 19 , -0 330 1,729 8 China 10 17 + /( 4,487 9,049 9 Italy 6 )- + )-( 1,832 /$*)- 10 Canada 11 13 + )0 1,002 1,479 11 Others 93 114 *+ *+ 13,278 41,348 Total 366 507 100% 39% 62,916 161,166Source: fDi Intelligence.œ United States11 œ United Kingdom12 [j]Yl] /$..( bgZk& L`] kljgf_ la]k Z]lo]]fL`] MK [gflafm] lg Z] l`] d]Yaf_ afn]klgj The UK emerged as the second-largest Brazil and Spain in terms of culture andaf :jYrad af *())$ af l]jek g^ l`] fmeZ]j afn]klgj af :jYrad$ Zgl` af l]jek g^ l`] language give an added incentiveof investment projects (149), value of fmeZ]j g^ ><A hjgb][lk Yf l`]aj nYdm]$ for investors from Spain to invest in Brazil.><A MK)*$+-0e! Yf l`] fmeZ]j g^ which stood at 45 projects and US$12,248m D]Yaf_ KhYfak` Õjek af[dmaf_ L]d]^gfa[YbgZk [j]Yl] +-$)1-!& L`ak ak dYj_]dq j]kh][lan]dq& L`] fmeZ]j g^ hjgb][lk egj] Yf AZ]jjgdY Yj] hj]k]fl af :jYrad Yf]phdYaf] Zq alk _]g_jYh`a[ hjgpaealq Yf l`Yf gmZd] Z]lo]]f *()( Yf *())& L`] `Yn] hdYfk lg Zggkl l`]aj afn]kle]fl afthe existence and development of trade [gmfljq Ydkg [j]Yl] *)$(,( bgZk ^gj l`] the country in the coming years.agreements. US companies target the ICT, Brazilian economy in 2011. Several largeeYfm^Y[lmjaf_$ Zmkaf]kk k]jna[]k companies such as Rolls Royce, BP, Royal œ Germany14Yf ÕfYf[aYd k]jna[]k k][lgjk af :jYrad& <ml[` K`]dd Yf :? _jgmh `Yn] Z]]f hj]k]fl Another European country, Germany, in Brazil for many years. Investors from the afalaYl] / g^ Ydd ><A hjgb][lk af :jYrad afThe Overseas Private Investment MC k]]c ><A hjgb][lk Y[jgkk l`] Zmkaf]kk *())$ [j]Ylaf_ 0$./0 bgZk3 `go]n]j$ l`]Corporation, an organization that aims to services, manufacturing, mining and metals value of these projects remained low atpromote American companies overseas, and ICT sectors. MK+$(,-e& :jYrad `Yk Z]]f af[j]Ykaf_ak [gflafmgmkdq ]f`Yf[af_ l`] [gddYZgjYlan] its dialogue and communication withafn]kle]fl [daeYl] Z]lo]]f :jYrad Yf l`] œ Spain13 Germany. It has called on Germany toUS. To strengthen its ties with Brazil further, Spain has maintained its position among invest in the Brazilian economy to upgradethe US signed the Agreement on Trade l`] lgh Õn] afn]klgjk af :jYrad af l]jek g^ its infrastructure as it gets ready to hostand Economic Cooperation in March 2011. l`] fmeZ]j g^ hjgb][lk Zgl` af *()( Yf the 2014 FIFA World Cup and 2016 *())& L`] [gmfljq mf]jlggc +/ hjgb][lk Olympics. Brazil also plans to attractLeading US multinationals, such as General in Brazil worth US$4,483m in 2011 and foreign investment from Germany toMotors, IBM, Dow Chemical Company and exploit its deep sea oil reserves. GermanyGeneral Electric Company have expanded 12. “Brazil-UK Trade and Economic Relations,” Embassy of is considering expanding its investments Brazil in London website, www.brazil.org.uk, accessed 28their presence in Brazil. These companies April 2012. in Brazil primarily in the areas of defense^g[mk gf Zgl` ge]kla[ ]eYf Yf ]phgjlk& 13. “New FDI Record Set in Brazil,” IHS Global Insight Daily Analysis, 27 January 2012, via Dow Jones Factiva © 2012, IHS Global Insight Limited; “Spain’s Telefonica to invest 14. “Daimler Mulling Small Car Production Site In Brazil —11. É:jYrad$Ê G^Õ[] g^ l`] MK LjY] J]hj]k]flYlan] o]Zkal]$ $14.7 bn in Brazil through 2014,” Fox news Latino website, Report,” Fox business website, www.foxbusiness.com, www.ustr.gov, accessed 30 May 2012. latino.foxnews.com, accessed 30 April 2012. accessed 24 April 2012.30 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • and energy. German car majors such Also, Japanese companies are expected to consumer market has led to an increaseas Volkswagen and Daimler AG are also seek more growth opportunities outside af afn]kle]flk Zq keYdd Yf e]ame%present in Brazil. These companies plan their home economy with their cash-rich sized Chinese companies in the country’slg eYc] ^mjl`]j kmZklYflaYd afn]kle]flk ZYdYf[] k`]]lk& manufacturing area. With Brazil urgingin their Brazilian production facilities to Chinese companies to invest in non-rawcater to the growing domestic market. œ Emerging relations with China16 material sectors, China’s investments China’s FDI project count in Brazil has Yj] ]ph][l] lg Z] aj][l] lg k][lgjk km[`œ Japan15 _jgof /( È ^jge )( af *()( lg )/ as technology, logistics and infrastructureL`] fmeZ]j g^ ><A hjgb][lk Zq BYhYf aflg in 2011. The country emerged as the in the future. The momentum of Chinese:jYrad _j]o -/ lg +. af *())& BYhYfÌk k`Yj] Õ^l`%dYj_]kl afn]klgj af :jYrad af *()) investment in Brazil is expected to increaseaf ><A hjgb][lk oYk / oal` hjgb][l nYdmaf_ af l]jek g^ ><A nYdm] Yl MK,$,0/e3 Y Yk Y j]kmdl g^ Y bgafl [geemfaim† ka_f]US$4,954m in 2011. Brazil has consistently sixfold increase from its value in 2010. in 2011 to promote cooperation in tradeencouraged Japanese companies to invest ;`afY Ydkg jYfc] Õ^l` oal` j]kh][l lg and investment. However, differencesaf :jYradÌk ]n]dghe]fl& 9 fmeZ]j g^ l`] fmeZ]j g^ bgZk [j]Yl] af l`] [gmfljq in culture, management style and lowerBYhYf]k] Õjek km[` Yk YmlgeYc]j FakkYf$ 1$(,1 bgZk!& Egkl g^ l`] ;`af]k] ><A af ;`af]k] dYZgj hjgl][lagf klYfYjk [Yfkl]]d hjgm[]j Fahhgf Kl]]d Yf [YZd] :jYrad [Yf Z] [`YjY[l]jar] Yk j]kgmj[]% create challenges for the developmentmanufacturer Furukawa Electric have a seeking, with Brazils rich supplies of g^ ;`af]k] Zmkaf]kk af :jYrad&presence in Brazil. Japan’s need for natural oil, gas and minerals acting as majorresources due to its energy shortage and attraction for Chinese investors. As China:jYradÌk j]imaj]e]fl ^gj `a_` l][`fgdg_a]k lg j]imaj]k an]jkalq Yf `a_` ngdme]kZmad mh alk hmZda[ af^jYkljm[lmj] ^Y[adala]k `Yk of natural resources, the country iscreated prospects for a strategic partnership sourcing these resources from Brazil.17Z]lo]]f :jYrad Yf BYhYf ^gj emlmYd Egj]gn]j$ l`] j][]fl Zgge af l`] :jYradaYfinvestments. 16. “China invests $12.67b in Brazil,” The Economic Times website, articles.economictimes.indiatimes.com, accessed 24 April 2012; “China, Brazil to promote trade, investment)-& “Japan’s number 2 automaker plans to increase production co-op,” China Daily website, www.chinadaily.com, accessed in Brazil,” MercoPress website, en.mercopress.com, accessed 26 April 2012. 29 April 2012; Invest in Brazil, 2011, Nikkei Business & Nikkei 17. Chinese Investments in Brazil, May 2011, China-Brazil Business Online, 2011. Business Council, 2011. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 31
    • A record yearInvestors’ plans for 2013:a majority have Brazil in mindIn general, is your group considering establishing or developingactivities in Brazil?Cant say (do not suggest) 9.3% Probably not 8.4% Yes, deÕnitely 33.5% 59.8% of investors 22.6% DeÕnitely not plan to invest in Brazil 26.3% Yes, probablySource: Ernst & Young 2012 Brazil attractiveness survey. Total respondents: 250.O`]f Ykc] YZgml afn]klaf_ af :jYrad$ Y dgl gf l`] ]imadaZjame Z]lo]]f l`] ^mlmj] Despite this positive outlook, Brazil’s FDIinvestors had mixed responses. The consumption and investment patterns of fmeZ]jk ^gj l`] Õjkl imYjl]j g^ *()*Brazilian economy’s strong foundations the country. depict a different picture from investors’mean that 60% of investors say they plan h]j[]hlagfk YZgml ]phYfaf_ l`]aj Y[lanala]klg ]klYZdak` gh]jYlagfk af :jYrad$ o`ad] +) Factors that can deter investors include high af l`] [gmfljq& :jYrad j][gj] ><A afÖgokdo not. interest rates and the complex Brazilian tax lglYdaf_ MK-Z af I) *()*$ Y ][daf] ^jge regime. Companies investing in Brazil will I) *())Ìk MK*+Z& L`] [gmfljq j][gj]Brazil has transformed itself from a country need to consider these in assessing likely 110 projects in the period (down 19% fromoal` Zd]Yc ][gfgea[ hjgkh][lk mjaf_ outcomes for their investments.18 Firms that I) *())! [j]Ylaf_ )/$,** bgZk dgo]j Zql`] )1/(k$ lg Y ^gjeaYZd] ^gj[] af l`] Yj] fgl Ydj]Yq ]klYZdak`] af :jYrad `Yn] /( l`Yf I) *())!&_dgZYd ][gfgeq ]fbgqaf_ _jgol` jYl]k YZgn] greater concerns related to the challengesaverage world GDP growth in recent years. associated with the economy. Of the The ICT sector and the sales, marketingBrazil, which persistently underperformed companies that do not have a presence in and support function were the majorfor a long period, experiencing repeated Brazil, a surprising 64% have no plans for an Yj]Yk g^ ^gj]a_f afn]kle]fl af I) *()*&[jak]k Yf `qh]jafÖYlagf$ `Yk eYfY_] lg investment in the country, as these players A;L Y[[gmfl] ^gj l`] dYj_]kl fmeZ]j g^j]Y[` Y klYZd] _jgol` ljYb][lgjq$ eYcaf_ are not familiar with Brazil’s regulations and ><A hjgb][lk af l`] imYjl]j oal` +- hjgb][lk$the country attractive for investors. alk Zmkaf]kk [daeYl]& ^gddgo] Zq J;H ), hjgb][lk! Yf9llYafe]fl g^ hgdala[Yd klYZadalq ak gf] manufacturing (13 projects). The ICT[jala[Yd ^Y[lgj af l`ak& :jYrad `Yk Z]]f YZd] Companies that already have operations in industry also emerged as the strongest into maintain low risk for investors through Brazil are willing to face these challenges l]jek g^ ><A nYdm] af I) *()* MK)&*Z!alk klYZd] _gn]jfe]fl& :jYrad jYfc] YZgn] Yk l`]q kljgf_dq Z]da]n] l`Yl :jYrad `Yk Yf bgZ [j]Ylagf +$-**!& :q ^mf[lagf$some other Latin American countries such sound economic prospects. In our survey, sales, marketing and support attractedYk E]pa[g$ 9j_]flafY$ ;gdgeZaY Yf H]jm$ f]Yjdq /+ g^ l`] j]khgf]flk kYa l`]q l`] egkl ><A hjgb][lk af I) *()* ,+!$in The Economist’s Political Instability do not consider relocating part of their [j]Ylaf_ )$*1) bgZk& L`] j]Ydalq g^ ><A afIndex 2009–10. activities from Brazil to another country. *()* oadd mdlaeYl]dq Z] ]l]jeaf] Zq In the 15% of companies that may move :jYradÌk YZadalq lg lYc] YnYflY_] g^In the short term, investors can rely on gh]jYlagfk$ j]Ykgfk ^gj l`]aj hgkkaZd] its strengths and address the challengesBrazil’s domestic consumption growth story relocation are linked to their desire to the economy is facing.Yf j]Yh Z]f]Õlk& L`] ?gn]jfe]fl `Yk Ydkg tap and develop new local markets andtaken various measures, including cutting to increase market share in anotherafl]j]kl jYl]k$ lg [j]Yl] ]eYf Yf Zggkl ]paklaf_ eYjc]l È jYl`]j l`Yf lg h]j[]an]industrial competitiveness. However, shortcomings of Brazil as a location.the success of these measures will depend 18. Rapid-growth markets forecast, Ernst & Young, July 2012.32 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • ViewpointBrazil’s real estate boom Luiz Lopes$ ;=G$ :jggcÕ]d :jYradThe Brazilian subsidiary of Canadian With the crisis in the Eurozone continuing Centro-Oeste region, and penetrate newassets manager Brookfield recorded total and the economic recovery in the US markets in the south of the country,sales of US$180m in 2006, the year it looking shaky, Brazil will become the especially in the cities of Curitiba andlaunched its initial public offering (IPO). second-largest real estate investment Florianópolis. The bulk of company salesFive years later, the companys financial market in the world in 2012, according to is concentrated in the average propertystatements recorded US$2.2b in a survey conducted by the Association of hja[] jYf_]$ nYdm] Yl MK )*-$(((&properties sales. This represents a 12-fold Foreign Investors in Real Estate (Afire). “We believe that the real estate marketincrease that has guaranteed Brazil The country is part of the investment will have solid growth for many years,Y ** eYjc]l k`Yj] g^ l`] [gehYfqÌk hdYfk ^gj )0&. g^ j]khgf]flk$ oal` [YhY[alq lg _jgo 0 lg )( h]jglobal business. who were drawn from companies and year,” says Lopez. funds that together control more than“The main reason for the attractiveness US$800b of assets under management In addition to Brazil’s strongof investment and growth in Brazil is that around the world. macroeconomic performance, optimismthe country has been growing fast and is underpinned by two other factors:it offers a huge number of opportunities, a young population with stable incomewith a low level of difficulty and risks. The main and strong demand for housing; and a hugeThe company is currently much greater reason for the `gmkaf_ k`gjlY_] g^ -&- eaddagf hjgh]jla]k&here than in Canada,” says Luiz Lopes,Brookfield Brazil CEO. attractiveness ;mjj]fldq$ )( g^ :jggc^a]dÌk j]Yd ]klYl] of investment investments are directed to Minha Casa,From the US$12b of assets under and growth in Minha Vida (My House, My Life),Brookfield Brazil’s management last year, the federal government’s low-cost+1&/ o]j] Yddg[Yl] af hjgh]jla]k Yf Brazil is that the country housing program. “There is a third factor,)1&1 af k`ghhaf_ []fl]jk& L`ak ak Y _gg has been growing fast. not so visible yet, that we believe will beindicator of how sustainable GDP growth, a big hit for the next 30 years:the greater availability of credit and Brookfield Brazil’s strategy is to invest the exchange of shacks to apartments.a rising middle class that is able to buy in the areas in which most of the income Shantytowns represent a huge potentialtheir first house has boosted the real and businesses are currently concentrated, for new businesses,” concludes Lopez.estate industry over the last decade. such as the state of São Paulo and Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 33
    • Great momentumBrazil, the investors’ viewPicture: Amazon Forest, Pará, Brazil.34 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Great momentum 78% see Brazil as the most attractive country in Latin America. 87% of the investors see Brazil’s market size as its most attractive asset. 72% of respondents believe Brazil has a strong entrepreneurial culture. 42% of investors expect Brazil’s oil and gas sector to drive growth. 30% of respondents expect Brazil to be the leader in the energy sector by 2020. Pre-salt new opportunities. reserves discovery to open up Challenges to be addressed: skills, costs and operating conditions as well as low quality but yet high cost of transportation system. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum +-
    • Great momentumBrazil:Latin America’s leaderBrazil emerged as the most attractive country respondents than Argentina (which was D] Zq Y k]l g^ ][gfgea[ hgda[q e]Ykmj]k$for investment, named in Latin America’s f]pl Z]`af :jYrad af YoYj]f]kk$ Ydgf_ Brazil’s Class C (middle class) has expandedlgh l`j]] Zq /0&, g^ l`] j]khgf]flk af with Chile). Brazil was also mentioned many from around 66 million people in 2003 toErnst & Young’s 2012 Brazil attractiveness more times overall than any other country. 105 million in 2011, and is expected to growsurvey. Brazil holds the top spot among Dac]dq [geh]lalgjk ^gj :jYrad Yj] lg Z] ^gmf lg ))0 eaddagf Zq *(),& Gf l`] gl`]j `Yf$afn]klgjk Z][Ymk] g^ alk jgZmkl ][gfgea[ in the large rapid-growth economies as well as the country’s poor classes have declined^gmfYlagfk2 Y Zmj_]gfaf_ ead] [dYkk$ in the developed economies of the West. from a total of 96 million people in 2003rising domestic consumption for goods and Gmj j]khgf]flk ,1! Z]da]n] l`Yl ;`afY to 63 million in 2011. Brazil’s GDP per capitak]jna[]k Yf Y oa] ZYk] g^ afmkljaYd Yf ak l`] dYj_]kl [geh]lalgj g^ :jYrad$ ^gddgo] Zq increased at a compounded annualnatural resources. The country, in comparison India (14%) and the US (10%). From Latin _jgol` jYl] ;9?J! g^ ))&0 Z]lo]]fwith other Latin American economies, stands America, Argentinas GDP growth rate, which 2000 and 2011, larger than that for Latinout in terms of attractiveness; our survey oYk `a_`]j l`Yf :jYrad af *())$ Yf alk mfaim] America’s other RGMs: Argentina (3.2%),Õfaf_k km__]kl l`Yl :jYrad `Yk Zq ^Yj l`] kmklYafYZd] ]n]dghe]fl eg]d [Yf eYc] ;`ad] 1&/! Yf E]pa[g +&.! mjaf_highest awareness and attraction. Brazil was the country a potential competitor for Brazil the same period.l`] Õjkl [gmfljq e]flagf] Zq )( lae]k egj] in the long term.From a general point of view, could you list, in decreasing What is the criterion to evaluate howorder, the three most attractive countries in which to attractive Brazil is as a location for establishingestablish operations in Latin America? new activities?Brazil Brazils domestic market 78.4% 86.5%Argentina Quality of life, culture, social environment and language 44.6% 76.0%Chile Telecommunications infrastructure 42.9% 72.8%Mexico Entrepreneurial culture 17.9% 71.9%Colombia Local labor skills 17.0% 68.5%Peru Access to funding and local partnerships 8.8% 64.4%Uruguay 3.9% R&D availability and quality 61.7%Venezuela 3.2% Government initiatives on sustainable developmentParaguay 60.8% 3.1% Labor costsEcuador 59.4% 3.0% Political, legislative and administrative environmentCosta Rica 59.0% 1.9% EducationBolivia 53.2% 1.9% Transport and logistics infrastructureDominican Republic 43.4% 1.0% Flexibility in labor lawPanama 41.4% 0.7% Corporate taxationHonduras 32.7% 0.4%Belize Source: Ernst & Young 2012 Brazil attractiveness survey. 0.4% Total respondents: 250.None 3.8%Cant say 8.6%Source: Ernst & Young 2012 Brazil attractiveness survey.Total respondents: 250.36 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Viewpoint How to serve 40 million new customers Ivan Zarur, CFO, McDonald’s Brazil Over the past decade, more than the fast food industry in Brazil. From 2001 j]hj]k]fl] ,+& 9k l`]q kh]f egj] 30 million Brazilians have risen out of to 2011, the number of franchising supply time away from home, they have poverty and moved into the middle class. chains operating in the country increased increased their spending on fast food. This figure is equivalent to the total from 113 to 481. The market turnover population of Canada. Research conducted was nearly US$9b last year alone, For McDonalds, the first challenge is to by Fundação Getúlio Vargas (FGV) shows according to the Brazilian Franchising increase its number of outlets. In Canada, that an additional 12 million people will Association (ABF). for example, 1,400 restaurants serve a have reached the middle class by 2014, population of 32 million people. In Brazil, when the country hosts the FIFA World “Globally, Brazil is one of the top 10 there are about 670 outlets catering for ;mh$ Yfgl`]j - eaddagf eYq Z] jan]f af markets for McDonald’s. It is one of the 200 million inhabitants. “Considering that the same direction. fastest-growing countries next to China,” our per capita income has been approaching says Ivan Zarur, CFO of McDonalds Brazil. that of more mature economies, there is In Latin “Regionally, Brazil is a fundamental power room for growth,” says Zarur. and a leader. In Latin America, we are now America, we are analyzing what Brazil is doing and what Another challenge is manpower. With now analyzing Mexico might do,” he says. According to family incomes now higher, fewer parents what Brazil the ABF, in 2011, McDonalds was the need their children to work. So youngsters second-biggest franchise network in Brazil are continuing to study and looking forward is doing and by sales and the fifth by number of stores. to college. As a consequence, hiring staff what Mexico might do. has become problematic. “It is increasingly Sustaining growth and meeting the new difficult to find, hire, train and retain staff: This new group of people with purchasing demand brings a high number of -- g^ gmj j]klYmjYflk Yj] afka] k`ghhaf_ power, combined with the stability of challenges for companies in this sector. centers, where competition is fierce. income and employment in the last Af :jYrad$ oge]f j]hj]k]fl -, g^ l`] This is by far the biggest challenge our decade, has directly impacted upon labor market — 10 years ago, they industry faces,” says Zarur.9[[gjaf_ lg Fa]dk]fÌk I, *()) _dgZYd kmhhgjl ^gj Õjek `Yk ^mjl`]j Zgdkl]j] œ Questions on Brazil’s business[gfkme]j [gfÕ]f[] Õfaf_k$ :jYrad its position as a top choice for foreign environment and operational costsj][gj] l`] `a_`]kl [gfkme]j [gfÕ]f[] [gehYfa]k& Af G[lgZ]j *())$ :jYrad oYk Brazil’s political environment comparedin Latin America with an index of 112, the jYfc] Yk l`] l`aj%Z]kl [gmfljq Yegf_ with those of RGMs such as Russia,Õ^l`%`a_`]kl k[gj] Yegf_ l`] -. [gmflja]k the G20 at providing young entrepreneurs AfaY Yf ;`afY `Yk eY] al j]YkgfYZdqe]Ykmj] _dgZYddq& :jYrad g^^]jk eYfq oal` Y ^YngjYZd] ]fnajgfe]fl ^gj Zmkaf]kk&20 YlljY[lan] ^gj afl]jfYlagfYd Õjek$ oal` -1opportunities to investors in the thriving of the respondents pointing to this option.sectors of infrastructure, manufacturing, œ Mixed perception on HR skills However, the huge opportunities presentedoil and gas, and tourism.19 Gmj kmjn]q j]n]Yd] Y jYf_] g^ na]ok YZgml Zq :jYrad f]] lg Z] o]a_`] Y_Yafkl :jYradÌk dg[Yd dYZgj kcaddk& G^ l`] [gehYfa]k the shortcomings associated with operatingœ Market opportunities and fgl q]l hj]k]fl af :jYrad$ gfdq -. a]flaÕ] af l`] [gmfljq& 9 dgo%imYdalq Yf `a_`%[gkl entrepreneurship as Brazil’s main ogjc^gj[] kcaddk Yk Y ZYkak ^gj afn]klaf_ af transportation system still remains a weak assets l`] [gmfljq È Yk ghhgk] lg /. g^ l`gk] factor for investors (only 43.4% mentionedNearly 86.5% of investors indicated Brazil’s Ydj]Yq ]klYZdak`] af :jYrad& O`ad] J< it as an attraction) as it leads to operationaldomestic market as a criterion that makes oYk afa[Yl] Yk afÖm]flaYd Zq .)&/ g^ af]^Õ[a]f[a]k& @a_` dYZgj [gklk [gehYj]al Yf YlljY[lan] dg[Ylagf ^gj ]klYZdak`af_ f]o afn]klgjk$ ]m[Ylagf oYk `a_`da_`l] Zq with other RGMs such as Russia, China andactivities. Brazil’s economic growth has -+&*& L`] [gmfljq kladd dY_k Z]`af l`] ?*( E]pa[g$ Ydgf_ oal` ja_a Yf afÖ]paZd] dYZgjcreated a huge domestic market with vast average in terms of university education regulations, continue to raise concernsZmkaf]kk ghhgjlmfala]k& L`ak jYok afn]klgjk and R&D according to Ernst & Young’s The for foreign companies. A high corporateto set up their facilities in the country. Nice Côte d’Azur 2011 Entrepreneurship tax rate of 34%, compared with its LatinIts strong entrepreneurial culture (cited Barometer. R&D as a function accounted for American peers such as Chile (18.5%)Zq /)&1 g^ l`] j]khgf]flk! [gehjakaf_ only 2% of the total FDI projects undertaken and Mexico (30%), also dampens investorsY ^YngjYZd] Zmkaf]kk [daeYl] Yf ^mfaf_ af :jYrad ^jge *((/ lg *())& interest in Brazil.19. J]ml]jk3 Fa]dk]f ?dgZYd ;gfkme]j ;gfÕ]f[] I,*()) report; The Financial Times; CIA world factbook; Fundação 20. L`] Fa[] ;‘l] Ì9rmj *())$ =flj]hj]f]mjk`ah :Yjge]l]j Getulio Vargas (FGV); The Economist; Bloomberg. report, October 2011, Ernst & Young, Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 37
    • Great momentum Viewpoint Brazil’s US$70b boost Ricardo Trade, Operations & Competition Executive Director of the 2014 FIFA World Cup Local Organising Committee (LOC) In two years’ time, an estimated audience The figures consider investments in quality,” says Ricardo Trade, Operations of around three billion people will turn on infrastructure, new businesses and & Competition Executive Director of the their television sets to watch one of the direct and indirect impacts on 2014 FIFA World Cup Local Organising the world’s greatest sporting competitions employment generation, income, Committee (LOC). The current team of and the most popular one, the FIFA World the national production of goods and 80 employees from this private company Cup, which will be held in Brazil in 2014. services, visitor spending and tax has the responsibility to develop the In addition to the television audience, collection. Tourism alone may bring in logistics of transporting delegations, over 600,000 foreign tourists are around US$3b. Besides generating great officials and guests of FIFA; analyze more expected to visit the 12 host cities. international visibility, the World Cup can than 240 football training facilities to An event of this magnitude requires potentialize the attractiveness and select 64 that may be used for team extensive preparation. A study by interest from foreign companies training; set up the 12 different press Ernst & Young Brazil, in collaboration with and investors looking for development centers; and be in frequent contact with Fundação Getúlio Vargas (FGV), throws opportunities and business in Brazil. the host cities and government agencies light on the different ways in which the to guarantee that the stadiums, airports World Cup will affect the Brazilian The World Cup and public services will run properly economy and shows how the event offers during the tournament. many opportunities for growth. is a huge opportunity “The World Cup is a huge opportunity The direct investments of over US$11b in terms of promoting our image. It is in terms of by the Government and the private sector a chance to show that we have adequate on infrastructure (stadiums and their promoting public and private services; that Brazil surroundings, airports, highways, hotels our image. is a safe country; and that there is much and urban planning), are expected to more here than Rio de Janeiro and have a knock-on effect that will inject “The biggest challenge is to manage São Paulo. Above all, it is our chance to YalagfYddq gn]j MK-.Z aflg l`] [gmfljq$ a competition with continental distances, show our ability to host an event of this considering all the productive chain. where you need to transport people, magnitude. It is a big leap forward,” In total, the World Cup might generate ensure safety and efficient services and concludes Trade. over US$71b between 2010 and 2014, monitor the progress of works in order to and create over 3.6 million jobs per year. have everything ready on time and with38 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Brazilian cities:the undisputed leadership of São PauloSão Paulo maintains strong investment prospects while Rio de Janeiro rides high on Olympic spiritWhat is the most attractive Brazilian city?São Paulo 56.8%Rio de Janeiro 24.6%Brasilia 4.2%Curitiba 1.2%Porto Alegre 0.9%Belo Horizonte 0.6%Cant say 11.7%Source: Ernst & Young 2012 Brazil attractiveness survey. Total respondents: 250.In Ernst & Young’s 2012 Brazil attractiveness Zmkaf]kk hYjck Yf Yf Y^Öm]fl [gfkme]j Rio de Janeiro is also emerging as a preferredsurvey, 56.8% of investors named São Paulo, class. One of the main differentials of afn]kle]fl lYj_]l$ _]llaf_ Y Zggkl ^jge alkBrazil’s largest city, as the most attractive the city when compared with Brazil’s other j][]fl gad ak[gn]ja]k Yf oaffaf_ l`] Za lgmetropolis in the country, with another cities and regions is São Paulo’s logistics host the 2016 Olympic Games. The city offers24.6% of the respondents favoring Rio and transportation infrastructure, which is opportunities in sectors such as tourism,de Janeiro. made up of a network of modern highways, energy and infrastructure. However, an international airport and developed Rio de Janeiro’s high crime rate continues toKƒg HYmdg `Yk ]klYZdak`] alk]d^ Yk waterways and railroads. São Paulo also Z] Yf aeh]ae]fl ^gj emdlafYlagfYdk&22a prominent industrial and commercial has a good, professional education system`mZ ^gj :jYrad& L`] egkl aehgjlYfl and is home to several important research Brasilia, the country’s capital and the focalZYfcaf_ afklalmlagfk af :jYrad Yf l`] ogjd$ institutions, which together help promote point for the Federal Government, was namedas well as the largest stock exchange and stimulate economic and technological Yk l`] [alq g^ [`ga[] Zq ,&* g^ l`] afn]klgjkin Latin America, BM&F BOVESPA, development in the city.21 in our survey. The city’s young and well-are located in the city. São Paulo presents educated population with a high per capita[gfka]jYZd] [geh]lalan] YnYflY_]k lg 21. “Oil Investment in Brazil Continues,” Riotimesonline income creates an appealing investment website, riotimesonline.com, accessed 24 May 2012;afn]klgjk ^gj ]klYZdak`af_ Yf ]phYfaf_ “Skilled Labor Force,” Investe São Paulo (São Paulo’s climate for international companies. Agency For The Promotion Of Investments Andtheir presence. These include a highly Competitivenes) website, www.investe.sp.gov.br, accessed *- EYq *()*3 ÉJ]Ykgfk lg Afn]kl af KH$Ê Afn]kl] Kƒg HYmdg 22. “Brazil: Creatively coming out ahead,” Forbes website,imYdaÕ] ogjc^gj[]$ o]dd%]n]dgh] website, www.investe.sp.gov.br$ Y[[]kk] *- EYq *()*& www.forbescustom.com, accessed 24 May 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 39
    • Great momentumBrazil’s second cities face a critical lack of awarenessRespondents could not indicate a strong Belo Horizonte has a thriving mining What are the three most promisingpreference for cities other than São Paulo and afmkljq ZY[c] Zq alk ja[` eaf]jYd Brazilian second cities?Rio de Janeiro. Nearly 39% of investors faced resources, particularly iron ore, and fast- (excluding São Paulo and Rio de Janeiro)a challenge in identifying a promising city ]e]j_af_ Zagl][`fgdg_q Yf AL k][lgjk Yk Curitibagmlka] :jYradÌk ljYalagfYd Zmkaf]kk j]_agfk& well as good connectivity and infrastructure. 24.5% Foreign investors, particularly those that Belo Horizonte@go]n]j$ ;mjalaZY Yf :]dg @gjargfl]$ `Yn] fgl q]l ]klYZdak`] l`]aj gh]jYlagfk 20.2%Zgl` [YhalYd [ala]k g^ l`]aj j]kh][lan] klYl]k af :jYrad$ emkl Z] eY] egj] YoYj] g^ l`] Recife 15.6%Paraná and Minas Gerais, were named country’s geography. Porto AlegreZq egj] l`Yf gf] af Õn] j]khgf]flk$ 14.6%receiving nominations from 24.5% and The Government needs to come up with Campinas*(&* g^ afn]klgjk j]kh][lan]dq& ;mjalaZY `Yk Y [YehYa_f `a_`da_`laf_ l`] YlljaZml]k g^ 11.9%_Yaf] aehgjlYf[] Yk Yf AL `mZ m] lg alk the different cities, encouraging investors Salvadorgrowing talent pool and low wages, along lg [`ggk] ^jge Y ZjgY]j jYf_] g^ 11.2% Brasiliawith factors such as a good transportation locations. This is particularly important 9.2%system and ease of connectivity to other Z][Ymk] l`] `a_` [gkl g^ j]Yd ]klYl] af Fortalezaregions of Brazil. Incentives in the form of Rio de Janeiro and São Paulo might make 6.0%tax exemptions and supportive infrastructure these locations unappealing for offshored Natall`jgm_` ]klYZdak`e]fl g^ ^Y[adala]k km[` k]jna[]k Zmkaf]kk& 4.6% Florianópolisas software and technology parks have 2.7%Ydkg `]dh] lg Zmad Yf YlljY[lan] Zmkaf]kk Manausenvironment in the city.23 2.2% Goiânia23. “Curitiba,” Israel Economic Mission in Brazil website, 1.9% ooo&ZjYrad%akjY]d*().&[ge, accessed 28 May 2012. Campo Grande 1.7% Vitória 1.0% Belém 0.8% Ribeirão Preto 0.7% Foz do Iguaçu 0.5% Santos 0.4% Palmas 0.4% Cant say 38.9% Source: Ernst & Young 2012 Brazil attractiveness survey. Total respondents: 250.40 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 41
    • Boosting growthThe future attractiveness of BrazilPicture: Fernando de Noronha island, Brazil. 42 42 Ern Ernst Ernst Youngs 2012 Brazil attractiv ess survey Capturing th momentum Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum r oungs 2012 Brazil attractiveness survey Cap u in the omentu oungs 201 Br zi attrac iv g s ra il t a vene survey Capturing u e a ur ng aptur omentu mentu m tum
    • Boosting growthBoosti gr wthBoosting growthBoosting growth o ting ro t 83% of respondents believe Brazil’s attractiveness will improve over the next three years. Improve skills and secure the operational environment. 29% of investors see development of education and skills a priority. Build innovation capacity and diversify sectors: 60% of investors say improving education and training in new technologies can build Brazil’s innovation capacity. Promote Brazil’s regions. 56% of respondents cite infrastructure development as key in the attractiveness of Brazil’s cities. Ernst Ernst Ernst Youngs 2012 Brazi attra ti en ss survey Capturin th momentum Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum rn oungs oungs 2012 Brazil at ractiv ne su vey Capturing the om ntu u Brazil attractiveness survey Capturing raz r il tt ac iv ur a u ng ome me 43 3
    • Boosting growthKljgf_ [gfÕ]f[]af :jYrad *()-Over the next three years, do you think the attractiveness of Brazil as a placefor your company to establish or develop activities will ...?Improve 83% of investors think that the 83.4% attractiveness of Brazil will improveStay the same over the next three years.13.6%Decrease 2.3%Cant say (do not suggest) 0.7%Source: Ernst & Young 2012 Brazil attractiveness survey. Total respondents: 250.Afn]klgjk Yj] j]Yq lg Z]l gf :jYradÌk hjgkh][lk According to the Economist Intelligence Various investors have shown interest inin the medium term. According to our survey Unit (EIU), Brazil is expected to attract Brazil in the medium term. For instance,j]kmdlk$ 0+&, g^ l`] j]khgf]flk Z]da]n] kmklYaf] afÖgok g^ ><A af l`] e]ame af *()*$ :? ?jgmh Yffgmf[] Y MK*Zthat Brazil’s attractiveness will improve over term as the country’s domestic market size, investment in R&D in the Brazilian oil andl`] f]pl l`j]] q]Yjk$ ,)&/ [gfka]j l`Yl natural resource endowment and political _Yk k][lgj$ Yf MK%ZYk] Ydmeafme jgdd]l`ak aehjgn]e]fl oadd Z] egkl kmZklYflaYd& Yf eY[jg][gfgea[ klYZadalq oadd hYjldq products maker Novelis plans to investGfdq * g^ Ydd l`] j]khgf]flk Z]da]n] l`Yl [geh]fkYl] ^gj ]Õ[a]f[a]k af l`] Zmkaf]kk US$400m in Brazil to raise productionconditions in Brazil will deteriorate, illustrating environment. Economic growth, along capacity to meet the expected increase inkljgf_ afn]klgj [gfÕ]f[] af l`] [gmfljq with a sustained increase in real incomes, domestic consumption. The Government ofgiven its mixed economic performance is expected to create new opportunities :jYrad oadd f]] lg [j]Yl] Y egj] ^YngjYZd]in 2011. By contrast, only 38% of the for investors in the consumer goods and environment for investments, includingkmjn]q j]khgf]flk Z]da]n] l`Yl =mjgh]Ìk retailing industries. The pre-salt layer private investments, to tackle logisticalattractiveness will improve in the medium discovery will also create new avenues Zglld]f][ck l`Yl `af]j _jgol`&24term, with 22% expecting a decrease. for growth in the oil-related industries. 24. . “Brazil Business Environment: Country forecast Brazil August 2010,” The EIU website, store.eiu.com, accessed 24 May 2012.44 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Brazil’s most attractive sectors in the future:industry supporting servicesBrazil’s oil and gas sector is expected todrive the country’s growth in the comingyears according to 44.2% of investors. ViewpointThe sector attracted 33 projects during*((/ lg *())$ oal` Y lglYd nYdm] g^ The challenges of the oil industry in BrazilMK-&/Z$ o`a[` [j]Yl] /$+)* bgZk af l`]country during this period. Brazil’s oil and André Araujo, President, Shell Brazilgas sector is not only creating industrial Only a handful of activities are as international players to its upstreamhjgb][lk$ Zml Ydkg ]f%lg%]f k]jna[]k relevant to today’s strategic growth market, according to Ernst & Young.projects. Oil and gas projects create agenda in Brazil as the exploration of oil]ehdgqe]fl af Zmkaf]kk k]jna[]k3 ]ka_f$ and gas in the pre-salt fields. The “The pre-salt is a unique opportunity fordevelopment and testing; and sales, and operational and technological challenges Brazil, and Shell wants to contribute tomarketing and support functions. involving the exploration and production the development of this huge production in deep waters are expected to generate potential,” says André Araujo, PresidentThe country’s oil and gas sector has huge afn]kle]flk g^ YhhjgpaeYl]dq MK*-(Z of Shell Brazil. Shell has stakes in a blockpotential with the recent discovery of vast over the next 10 years, according to a located in the pre-salt Santos Basin, theproven reserves in an area called the joint study conducted by Ernst & Young :EK%-,$ o`a[` ak kladd af l`] ]phdgjYlagfpre-salt layer. In addition to increasing Brazil and Fundação Getúlio Vargas. phase. Overall, the company has 10Brazilian oil production, development of Another study by Banco Nacional de blocks of exploration, development andl`] hj]%kYdl Yj]Y ak ]ph][l] lg Zggkl bgZ Desenvolvimento Econômico e Social production in Brazil — five onshore andopportunities in the country as more and estimates that the domestic demand for five offshore. Of these, two have beenmore foreign companies invest in oil and goods and services in offshore producing oil and gas on a commercial_Yk ]phdgjYlagf Yf hjgm[lagf& L`] Zgge exploration and production is around scale: Parque das Conchas and Bijupirá-Yfla[ahYl] Zq l`] gad Yf _Yk k][lgj ak US$400b. Salema, both located at the Camposexpected to have positive spillover effects Basin in Rio de Janeiro State. The^gj gl`]j afmklja]k km[` Yk ]imahe]fl average oil production of these twomanufacturing and to lead to greater R&D The Government blocks was approximately 80,000 barrelsinvestments. Growing demand, coupled and the private a day in 2011. Over the next 18 months,with incentives for novel and innovativetechnologies to explore the pre-salt sector should the company will drill 8 to 12 wells in its concession areas.reservoir, has encouraged international be workingcompanies such as GE, Siemens, IBM, together. “The fiscal adjustment is likely to be aK[`dmeZ]j_]j$ >E; L][`fgdg_a]k Yf:Yc]j @m_`]k lg ]klYZdak` l`]aj J< I believe we are on the decisive factor in attracting investors to Brazil. This applies for any industry, butcenters in Brazil. right track. especially for the oil and gas industry. That is because any project ofNYjagmk d]Yaf_ _dgZYd gh]jYlgjk `Yn] In Brazil, the pre-salt oil fields lie exploration, development and productiona presence in Brazil’s oil and gas sector. 2,000–7,000 meters deep underground will result in long-term commitments andKey operators include Total SA, Technip, in an area of approximately 800km in will demand a high degree of investment.Chevron, Royal Dutch Shell, Repsol, BG length off the coast. It is estimated that The country must have a clear and stableGroup, Sinopec, ONGC and Statoil. With those fields hold 70 billion to 100 billion regulatory framework to continuek]n]jYd gad Õ]dk mf]j ]n]dghe]fl Yf barrels of oil and gas. It is an amount attracting investors. Brazil has honoreda large portion of the pre-salt province area which — if confirmed — would turn Brazil the contracts so far. Its a long journey inq]l lg Z] kgd$ Yjgmf 0( a^^]j]fl gh]jYlgjk into an energy superpower and see it rise which the Government and the private`Yn] [gfÕje] l`]aj hdYfk lg afn]kl Yf to sixth position among the largest sector should be working together.]klaeYl] lglYd g^ MK++(Z af :jYrad af holders of reserves in the world. In the I believe we are on the right track,”l`] f]pl )( q]Yjk& Ka_faÕ[Yfl gmldYqk Yj] past few years, the pre-salt fields have concludes Araujo.expected in areas such as exploration, attracted the attention of 36 majorevaluation, production, construction ofships, drilling and production units. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum ,-
    • Boosting growthWhich three of the following business :jYrad `Yk YhhjgpaeYl]dq ),&( Zaddagf program launched in March 2009.27sectors do you perceive as driving ZYjj]dk g^ hjgn]f gad j]k]jn]k Yf The program, which has entered its secondBrazil’s growth in the next two years? ),&/ ljaddagf [mZa[ ^]]l g^ hjgn]f fYlmjYd h`Yk]$ Yaek lg Zmad log eaddagf `ge]k gas reserves. The Government of Brazil ^gj dgo%af[ge] _jgmhk Z]^gj] *(),$ YfOil and gas plans to seek international capital to afngdn]k kmZkaa]k lg ^mf$ [gfkljm[l Yf 44.2% fund the development of these complex k]dd l`]k] Y^^gjYZd] `gmk]k&Real estate and construction 27.7% j]kgmj[]k Yf lg ]klYZdak` Y hjgm[lagfTourism sharing agreement (PSA) for the pre-salt Tourism remains another prominent 27.3% hjgnaf[]& @go]n]j$ k`gjlY_] g^ kcadd] dYZgj k][lgj af :jYrad& L`ak ak Zgjf] gml ZqAgriculture and food industry m] lg afkm^Õ[a]fl ljYafaf_ Yf ]m[Ylagf l`] j]khgfk]k j][]an] ^jge */&+ g^ 27.3% programs continues to plague the Brazilian the investors in our survey. Factors suchTransport industry and automotive oil and gas industry.25 Yk :jYradÌk fYlmjYd Z]Ymlq Yf aehjgn] 20.7% tourism infrastructure have placed itConsumer goods 20.3% The Brazilian real estate and construction Yegf_ l`] Z]kl lgmjakl ]klafYlagfkMining eYjc]l ak ]ph][l] lg oalf]kk jgZmkl in the world and acted as a major magnet 18.6% _jgol` Yk `a_`da_`l] Zq */&/ g^ l`] to international visitors. São Paulo andInformation and communication technologies, IT j]khgf]flk& :jYradÌk Zggeaf_ ][gfgeq Rio de Janeiro, important economic 16.4% and safer investment environment has `mZk af :jYrad$ hgkk]kk j]eYjcYZd]Logistics and distribution channels made the country’s real estate market a hot infrastructure that has paved the way 13.3%:*: k]jna[]k ]p[dmaf_ ÕfYf[] khgl ^gj _dgZYd afn]klgjk& L`] *()* kmjn]q ^gj Zmkaf]kk lgmjake Zq oYq g^ ]n]flk$(IT services, consulting, audit, communication etc.) of the Association of Foreign Investors in conferences and conventions. Their natural 10.7% Real Estate (AFIRE) placed the Brazilian landscapes have also acted as a strong:Yfc$ ÕfYf[] Yf afkmjYf[] attraction for leisure tourists. The World real estate market second in terms of 9.0% YlljY[lan]f]kk af *()* È YZgn] ;`afY Yf Economic Forum (WEF), in its 2011Cleantech 7.6% all the countries in Europe. Also, São Paulo Travel & Tourism CompetitivenessPharmaceutical industry and biotechnologies oYk a]flaÕ] Yk l`] ,l`%Z]kl [alq ^gj j]Yd Af]p$ jYfc] :jYrad Õjkl Yegf_ l`] 7.2% estate investment in 2012, up from its 26th 139 countries for its natural resources.Utilities place last year.26 The housing construction According to the International Congress 3.1% segment in the country has received and Convention Authority, Brazil rankedHeavy industry an enormous push from the Brazilian ninth as an international event destination 1.6%None Government’s Minha Casa, Minha Vida (My e]Ykmj] Zq fmeZ]j g^ e]]laf_k 0.4% @gmk]$ Eq Da^]!$ Yf Y^^gjYZd] `gmkaf_ organized in 2010.Cant say 3.0% *-& “Brazil At Risk Of Becoming One Big Petrobras,” Forbes website, www.forbes.com, accessed 28 May 2012; “Brazil:Source: Ernst & Young 2012 Brazil attractiveness survey Country analysis briefs,” Energy Information Administrationsurvey. Total respondents: 250. website, www.eia.gov, accessed 29 May 2012; “Skills shortage in Brazil’s oil industry,” The Financial Times 27. “India, Brazil and South Africa Address the challenge website, www.ft.com, accessed 28 May 2012. of slums,” The World Bank website, wbi.worldbank.org, 26. “Foreign R.E. investors: Buying but seeking improved accessed 27 May 2012; “Minha Casa, Minha Vida Phase fundamentals and FIRPTA reform,” Business Wire, 1 Two,” Riotimesonline website, riotimesonline.com, accessed January 2012; “U.S. is top 2012 property investment pick,” 28 May 2012; “Minha Casa Minha Vida Development,” ABS-CBN news website, www.abs-cbnnews.com, accessed Riotimesonline website, riotimesonline.com, accessed 28 May 2012. 28 May 2012.46 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • The country’s potential as a touristdestination, however, still remainsuntapped. According to the World Tourism ViewpointOrganization, Brazil recorded 5.2 milliontourist arrivals in 2010, fewer than other Economy boosts tourism in Brazilcountries in the Americas such as Mexico(22.4 million) and Canada (16.1 million). Ricardo Amaral$ ;=G$ JgqYd ;YjaZZ]Yf Afl]jfYlagfYd9jjanYdk af eYfq 9kaY HY[aÕ[ j]_agfk Ydkgremained higher than Brazil with Malaysia The opening of an office in São Paulo In comparison, foreign tourists who visitedreporting 24.6 million tourists, Hong Kong three years ago was the first sign that Brazil last year spent US$11.8b.20.1 million, Thailand 15.8 million and Brazil had become a strategic marketSingapore 9.2 million. for Royal Caribbean International, This boost to tourism has attracted the American giant that has operated in the attention of the international majorL`] ?gn]jfe]fl g^ :jYrad `Yk Z]]f Y[lan]dq the global cruise industry since 1968. cruise operators. Offering local packagespromoting tourism in the country through with prices similar to internationalhjgeglagfYd [YehYa_fk Yk o]dd Yk Zq vacations, the 20 vessels circulating thehjgnaaf_ ^mfaf_ ghlagfk& Af *()($ =eZjYlmj$ Operating :jYradaYf [gYkl [Yjja] /1*$/-( lgmjaklkthe country’s Tourist Board, launched the costs are high (99,000 of them foreigners) in the 2010campaign, Brazil is Calling You, to encourage to 2011 season. A joint study conductedZmkaf]kk Yf d]akmj] nakalgj Ögok aflg :jYrad and there are by the Brazilian Association of Maritimeand to highlight the opportunities in the significant Cruises — of which Amaral is President —nation. The marketing initiative is part infrastructure and the Fundação Getúlio Vargas showsg^ :jYradÌk HdYfg 9imYj]dY *(*( kljYl]_q$ that the cruise industry contributedwhich aims to achieve approximately a 300% problems despite recent Y lglYd g^ MK.-(e lg l`] :jYradaYfaf[j]Yk] af ^gj]a_f [mjj]f[q afÖgok ^jge improvements. economy during the last season.afl]jfYlagfYd lgmjaklk lg _Yjf]j MK)/&.Zand secure 113% growth in international Brazilian executive Ricardo Amaral has At the end of 2011, Brazil moved aheadlgmjake oal` ))&) eaddagf afZgmf ^gj]a_f accumulated the functions of CEO in of the UK to become the sixth-largestnakalgjk Zq *(*(& Dggcaf_ Yl l`] _jgol` Brazil, Latin America and the Caribbean. economy in the world. Brazil’s economicprospects for the sector in the coming years, “The operations of multinationals are rise has seen it become more central toBrazil’s Ministry of Tourism along with BNDES often determined by geographical the global operations of companies such`Yk gh]f] Y [j]al daf] lglYdaf_ MK(&-Z factors, but the business ends up being as Royal Caribbean. “But there are still :JD)Z! lg ^mf mh_jY]k$ ]phYfkagf Yf driven by results. Three years ago, my major challenges ahead. Operatingconstruction of new hotels in the country.28 position was based in Miami and now costs are high and there are significant it is in Brazil, the worlds second top infrastructure problems, despite recent office in terms of results,” says Amaral. improvements. The taxes and fuel costs28. “Brazil is leading the Travel & Tourism economy in Latin eYc] gh]jYlaf_ Y [jmak] af :jYrad *- America,” The World Travel & Tourism Council website, www.wttc.org$ Y[[]kk] *- EYq *()*3 É:jYrad lgmjake The strategic restructuring did not more expensive than in other countries. board unveils Aquarela 2020 outlining international promotion as 2016 Olympic host city,” PR Newswire, happen by chance. The movement Because of this, the country loses 16 December 2009. of more than 30 million people from competitiveness,” says Amaral. poverty to the middle class over the past decade has boosted Brazil’s tourism “However, the complexity of operations industry. Last year, the expenditure in Brazil is also an interesting and g^ l`] +&- eaddagf :jYradaYfk ljYn]daf_ positive element. It has a very specific abroad reached US$21.2b — legal and tax environment and the *0 `a_`]j l`Yf l`] hj]nagmk q]Yj& expertise gained here can be taken to The Brazilian Central Bank described other markets.” this spending as an all-time high. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 47
    • Boosting growthLong-term vision:an]jkaÕ[Ylagf f]]]How do you see Brazil in 2020? >gj]a_f afn]klgjk k]] Õn] eYaf Yj]Yk af oal` gf] g^ l`] Z]kl ]m[Ylagf Yf `a_`]j o`a[` :jYrad ak ]ph][l] lg Z][ge] egj] learning systems. The country needs toA leader in the energy sector 30.1% attractive. While 30.1% of investors see Zmad alk affgnYlagf [YhY[alq$ klaemdYl]Substantially improved infrastructure Brazil as the leader in the energy sector its R&D efforts and develop its education 24.2% Zq *(*( m] lg l`] ak[gn]jq g^ hj]%kYdl kqkl]e lg Zmad Y `a_`dq imYdaÕ] ogjc^gj[]&A leading country in the green economy reserves, 24.2% of respondents expect 23.8% kmZklYflaYddq aehjgn] af^jYkljm[lmj] af l`] œ Shared services centers29Among the worlds leading destinations country. Nearly 24% of respondents think Geographical and time zone proximity tofor manufacturing 23.2% :jYrad oadd Z][ge] Y d]Yaf_ [gmfljq af l`] Latin American nations, as well as to theA leading tourist destination green economy due to its strong position MK Yf ;YfYY$ `Yk jYof Y fmeZ]j g^ 20.8% af Zag^m]dk hjgm[lagf Yf [gfkmehlagf3 outsourcing players to the Brazilian economy.A regional and global hub for operations 23.2% expect manufacturing to grow L`] [gmfljq `Yk Z][ge] Yf aehgjlYfl 13.0% ka_faÕ[Yfldq Yf Yfgl`]j *(&0 k]] l`] dg[Ylagf ^gj [gehYfa]k lg ]klYZdak` l`]ajA leader in innovation country developing into a leading tourist Zmkaf]kk hjg[]kk gmlkgmj[af_ :HG! g^Õ[]k$ 7.7% destination in the long run. shared services centers (SSC), call centersA leader in high value-added services 5.2% and offshore delivery centers.Among the worlds leading destinations L`] YZmfYf[] g^ fYlmjYd j]kgmj[]k `Ykfor shared services centers Z]f]Õl] :jYrad Zq ]fYZdaf_ l`] ][gfgeq @go]n]j$ Y ]Õ[a]f[q g^ =f_dak`%kh]Ycaf_ 5.1% lg _jgo$ o`ad] Ydkg [j]Ylaf_ Y [`Ydd]f_] Zq personnel in Brazil presents a challengeA country with one of the best educationand higher learning systems drawing FDI away from value-added sectors for investors willing to commit their3.3% Yf affgnYlagf%ZYk] k]jna[]k& ^mfk af ]klYZdak`af_ l`]aj [gflY[lOther []fl]jk af l`] fYlagf& ?dgZYd =f_dak`3.2% Concerns remain in the long term for Brazil Corporation’s Business English Index 2012None as only 5.2% of investors see it as a leader e]Ykmj]k :mkaf]kk =f_dak` hjgÕ[a]f[q 1.1%Cant say in high value-added services; 5.1% view it as4.1% the leading destination for shared services 29. “GlobalEnglish Business English Index reveals skills centers and only 3.3% of the respondents shortage and unequal odds for international businessSource: Ernst & Young 2012 Brazil attractiveness success in 2012,” The GlobalEnglish Corporation presssurvey. Total respondents: 250. expect Brazil to emerge as the country release, www.globalenglish.com, 3 April 2012.48 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Viewpoint Brazil’s auto industry still in the fast lane Cledorvino Belini, Chairman, Fiat Brazil The automotive industry continues to mh lg , af *()*& ÉL`] :jYradaYf eYjc]l explain the strength of the Brazilian set new records in Brazil. Only a year has been experiencing an unprecedented automotive industry. There are after registering the best performance phase in its history,” says Cledorvino ,- a^^]j]fl ZjYfk Yf egj] l`Yf in its history, the industry’s sales Belini, Chairman of Fiat Brazil and head 2,000 models and versions of vehicles totaled 3.63 million units in 2011, of Anfavea. “Four years after a crisis available to Brazilian consumers. Yf af[j]Yk] g^ +&, gf *()($ o`]f that has shaken economies that are As Belini says, even with fierce kYd]k `Y j]Y[`] +&-) eaddagf mfalk& traditionally stronger, Brazil is one of the competition, the market still offers great According to statistics released by few countries with real growth prospects. opportunities for growth. The federal the National Association of Automobile As a market with potential for vehicle government is recognizing its value. Manufacturers (Anfavea), production sales expansion, we lag behind only the In September 2011, for instance, in 2011 had amounted to a record US and China,” he says. the tax on industrialized products (IPI) +&, eaddagf mfalk$ Y jak] g^ (&/ gf for imported models was raised, in a bid the previous year. Brazil is one to stimulate local car factories. Fiat sells the most light commercial of the few “In Europe, where the rate of vehicles in Brazil. In 2011, the Italian countries with motorization has already reached two carmakers factory in Betim, a city in people per vehicle, the car market real growth Brazil’s Minas Gerais State, produced is almost saturated. However, in Brazil, /.*$)0) [Yjk$ [gehYj] oal` /-/$,)0 prospects. where there is one car for every six in 2010. Betim is considered to be Fiat’s people, there is still great demand to be Stable employment and income, together biggest manufacturing plant outside Italy. met,” concludes Belini. with easy access to financing, partly The company predicts annual growth ofin the workplace) highlighted a lack of Relatively few high school students have from Brazil for one year of study at:mkaf]kk =f_dak` hjgÕ[a]f[q af :jYrad oal` a technical degree. Companies in Brazil [gdd]_]k Yf mfan]jkala]k af l`] MK lg ZggklY k[gj] Z]dgo ,&($ hdY[af_ l`] [gmfljq Yl `Yn] lg kh]f Y [gfka]jYZd] Yegmfl g^ innovation and education in the country.Y akYnYflY_] af l`] _dgZYd eYjc]lhdY[]& egf]q ]n]jq q]Yj lg imYda^q l`]aj ogjc]jk&Brazil scored 2.95 in 2012, lower than Russia L`] k`gjlY_] g^ imYdaÕ] ogjc]jk ak :jYrad f]]k lg an]jka^q alk]d^ Zq ^g[mkaf_ +&.(!$ ;`afY ,&,,! Yf AfaY -&-/!& particularly acute in Brazil’s IT sector. on higher value-added services if it wantsBrazil needs to enhance the English-speaking According to Brasscom, the country will to insulate itself from the volatility in[YhYZadala]k g^ alk hghmdYlagf af gj]j lg dY[c YZgml /-($((( AL ogjc]jk Zq *(*(& [geegala]k eYjc]lk È Yf hjgna] alkl`jan] gf Y _dgZYd ZYkak& population with the opportunity of higher- L`] ?gn]jfe]fl g^ :jYrad f]]k lg Zgdkl]j kcadd] Yf Z]ll]j%hYa ]ehdgqe]fl&œ Value-added services, and education and expand measures such as the Pronatec L`ak f]]k lg Z] kmhhgjl] oal` ^YngjYZd] and higher learning30 project (part of the Bigger Brazil Plan) government policies that provide anA weak higher education system has l`Yl g^^]jk ]m[YlagfYd ÕfYf[af_ daf]k ]fYZdaf_ ]fnajgfe]fl ^gj affgnYlagfj]kmdl] af Y k`gjlY_] g^ kcadd] dYZgj af to young professionals and recent school in the country.:jYrad& 9 klmq Zq l`] Afklalml] ^gj 9hhda] leavers. The goal of the initiative is toEconomic Research highlighted the lack imYda^q ^gmj eaddagf h]ghd]$ Zq *(),$ afg^ j]imaj] kcaddk af :jYradÌk ogjc^gj[]& different areas of technology. Brazil needs to increase its impetus on programs such30. “Brazil Science Without Borders Undergraduate Program,” as Science Without Borders, which provide Institute of International Education website, www.iie.org, accessed 28 May 2012. scholarships to undergraduate students Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum 49
    • Boosting growthBrazil’s action planAction 1: Improve skills and secure the operational environmentAccording to you, what measures G^ gmj kmjn]q j]khgf]flk$ *0&0 Z]da]n] Yn]jY_] g^ +,& 9fgl`]j klmq Zq >?Nshould Brazil prioritize to improve its that development of education and skills will hj]a[lk Y ]Õ[al g^ 0(($((( hjg^]kkagfYdkattractiveness in the coming years? have a high impact on Brazil’s attractiveness. af :jYradÌk afmkljq Zq *(),& 9ea l`ak strong demand for skilled professionals,Develop education and skills 28.8% Brazil’s steady growth in the past decade development of Brazil’s education systemInvest in major infrastructure and urban projects `Yk YehdaÕ] l`] afmkljqÌk j]imaj]e]fl is an imperative step.31 28.5% ^gj Y imYdaÕ] Yf hjgm[lan] ogjc^gj[]&Increase incentives against corruption The country, however, faces a shortage Afn]klaf_ af eYbgj af^jYkljm[lmj] Yf mjZYf 23.8% g^ kcadd] dYZgj oal` l`] _Yh Z]af_ egj] hjgb][lk oYk [al] Zq *0&- g^ j]khgf]flkLower corporate taxation hjgfgmf[] af l`] [Yk] g^ Õjek oaddaf_ lg as a key focus area to enhance Brazil’s 23.6% hire managers, technicians and engineers. hjgkh][lk& L`] ?gn]jfe]fl `Yk Z]]fImprove urban security undertaking several measures to improve 23.2% According to the 2011 survey of talent the country’s infrastructure.Ensure a more transparent tax system k`gjlY_]k [gfm[l] Zq ]ehdgqe]fl 17.1%Lower labor costs services company ManpowerGroup, 31. “Brazil faces highest skills gap in Americas-Manpower,” Reuters website, www.reuters.com, accessed 26 May 2012; 14.9% -/ g^ :jYradaYf ]ehdgq]jk ^Y[] a^Õ[mdlq “Brazil’s Boom Needs Talent,” The Wall Street Journal website, online.wsj.com, accessed 28 May 2012; “LatinSupport high-tech industries and innovation Õddaf_ nY[Yfl hgkalagfk m] lg dY[c g^ American Markets Aim for a New Decade of Gains,” The(cleantech, IT, logistics, creative sectors, life sciences, etc.) YnYadYZd] lYd]fl$ [gehYj] oal` l`] _dgZYd New York Times website, www.nytimes.com, accessed 24 May 2012. 6.5%Facilitate access to credit 6.2%Promote small and medium-sized enterprisesdevelopment 5.9% Growth Acceleration Program Phase (PAC II)Relax competition rules Water and electricity During 2011 to 2014, Brazil plans to 2.8% 3%Other Sewage, security and Schools kh]f MK-*.Z :JD1-1Z! lg af[j]Yk] urban development 2% 1.4% 6% the country’s energy production capacity;None Transportation Zmad f]o `ge]k Yf k[`ggdk3 aehjgn] 0.7% 11% transportation, water and electricityCant say 49% provision and enhance sewage, security 1.7% Energy Yf mjZYf egZadalq&Source: Ernst & Young 2012 Brazil attractiveness survey.Total respondents: 250. 29% Construction Source: Business Monitor Internationa, Presidencia da Republica, Brazil. Sporting events Hospitality Public safety Brazil’s planned spending on the 12 cities 1% 0% hosting the FIFA World Cup in 2014 Ports 3% Yegmflk lg MK*)Z :JD+1&,Z!& L`ak ak Yddg[Yl] lg Yj]Yk km[` Yk af[j]Ykaf_ mjZYf Airports 21% Urban mobility egZadalq3 mh_jYaf_ klYamek$ Yajhgjlk Yf 40% hgjlk3 `gkhalYdalq3 Yf aehjgnaf_ hmZda[ safety. The Brazilian Government has Ydkg ]YjeYjc] MK/Z :JD)*&-Z! ^gj 35% Rio to host the Summer Olympic Games Stadiums in 2016. Plans include improvements in Source: Presidencia da Republica, Brazil. sports facilities, accommodation, transport infrastructure and security and technology.-( Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Viewpoint Effective public management Jorge Gerdau Johannpeter$ E]eZ]j g^ :gYj g^ <aj][lgjk$ ;geh]lalan] :jYrad Egn]e]fl E:;! Improvement of public governance and difficulties are always more complex,” Brazil’s strategic efforts on three key management, driven by greater efficiency says Gerdau, who is today a member issues: education, logistics and tax reform, and competitiveness, is key to Brazil’s of the Board of Directors at MBC. particularly on cumulative tax systems. development. There is currently a lack of transparency The difficulties over tax, to the extent that nobody This is one of the missions in which the knows the actual tax burden embedded businessman Jorge Gerdau Johannpeter are political in products and services. By taking is engaged, through the Competitive Brazil rather than a strategic approach, we would eliminate Movement (MBC). The MBC, a non- technical and Z]lo]]f -( Yf .( g^ :jYradÌk ]paklaf_ governmental organization recognized tax management problems,” says Gerdau. as a Civic Organization of Public Interest, these political Turning to another key priority, he adds: was created to improve the competitiveness difficulties are always “It is necessary to invest in education, of private organizations sustainably more complex. particularly in the initial phase of learning, and the quality and productivity of public to provide citizens with good education organizations, with the objective of raising According to Gerdau, in order for Brazil to programs and professional skills.” the quality of life for Brazilians. fulfill its full potential, a strategic debate is necessary. He emphasizes that the Gerdau also points to Brazil’s current legal “Technically, overcoming the shortcomings economic success of many Asian countries certainty as one of the major factors that stand in the way of Brazil’s further was only possible thanks to their clear attracting investment to the country. progress will not be easy. Although and effective strategic definition. According to him, none of the other BRIC the technology is available, the major countries can match Brazil’s level of legal obstacles to innovation in national public “Since 2007, Brazil’s average growth rate certainty. Gerdau identifies the emotional management have a strong political `Yk Z]]f d]n]daf_ Yl *&-$ Z][Ymk] o] involvement Brazilian entrepreneurs have ingredient. The difficulties are political haven’t managed to establish our goals with their country as another asset. rather than technical and these political adequately. At present, I would concentrate9dd l`]k] afn]kle]flk Zq l`] :jYradaYf in connection with corruption allegations of additional supporting information?gn]jfe]fl oadd kmZklYflaYddq ]n]dgh suggests a tougher approach in government. regarding the use of resources. This majorthe country’s infrastructure, creating The National Congress is also considering a modernization process intends to changeYf ]fmjaf_ d]_Y[q g^ Z]f]Õlk& jY^l Zadd l`Yl ogmd [j]Yl] aj][l daYZadalq ^gj l`] _gn]jfe]flYd Z]`Ynagj gf Ydd d]n]dk individuals and other entities caught trying focusing on the aspect of intergenerational;gjjmhlagf Yf Zmj]Ym[jY[q af Zmkaf]kk lg ZjaZ] ^gj]a_f hmZda[ g^Õ[aYdk& ;gjhgjYl] ]imalq& Al ak ]ph][l] lg ]f`Yf[] l`]also raise concerns among investors. h]fYdla]k [gmd af[dm] Õf]k g^ mh lg *( g^ ljYfkhYj]f[q Yf Y[[gmflYZadalq g^ l`] hmZda[Nearly 23.8% of the respondents indicated YffmYd j]n]fm]k Yf Y ZYf gf hYjla[ahYlagf sector in the country.that increasing incentives to lower corruption af Zaaf_ ^gj _gn]jfe]fl [gfljY[lk&ogmd `]dh l`] [gmfljq Z][ge] egj] Investors not yet active in Brazil areYlljY[lan]& >jYm$ ZjaZ]jq Yf [gjjmhlagf In 2011, Brazil allowed the OECD to review egj] [gf[]jf] YZgml k][mjalq af alkYj] ka_faÕ[Yfl akkm]k af :jYrad& 9 j][]fl hmZda[ k][lgj afl]_jalq af l`] [gmfljq$ mjZYf Yj]Yk l`Yf [gehYfa]k Ydj]Yqklmq Zq l`] >]]jYlagf g^ Afmklja]k g^ l`] Õjkl km[` j]hgjl aflg Y ?*( [gmfljq& operating in the country. Brazil’s citiesSão Paulo found that corruption costs Brazil By 2014, the Brazilian Government plans have started taking measures to addressZ]lo]]f )&, Yf *&+ g^ alk ?<H ]Y[` q]Yj$ lg aehd]e]fl l`] Afl]jfYlagfYd HmZda[ l`] hjgZd]e g^ [jae] È aehjgnaf_ k][mjalqjgm_`dq MK),.Z& :jYrad oYk jYfc] /+j Sector Accounting Standards (IPSAS) Zq ]klYZdak`af_ Y egj] ]^^][lan] hgda[]out of 182 countries in the Transparency for the federal level and for the state level hj]k]f[]3 `go]n]j$ l`ak f]]k lg Z]International Corruption Perceptions Index as well as for all municipalities. IPSAS communicated to foreign investors.2011.32 The country’s current administration Yj] _dgZYddq Y[[]hl] `a_`%imYdalq hmZda[ak$ `go]n]j$ k]]caf_ lg Yj]kk l`] hjgZd]e3 k][lgj Y[[gmflaf_ klYfYjk l`Yl j]imaj]the recent resignation of several ministers and promote the recording and reporting g^ _gn]jfe]fl Ykk]lk Yf daYZadala]k gf32. 12th Global Fraud Survey, Growing Beyond: a place for Yf Y[[jmYd ZYkak Yk o]dd Yk l`] ak[dgkmj] integrity, Regional insights: Brazil, Ernst & Young, 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum -)
    • Boosting growthAction 2: Build innovation capacity and diversify sectorsWhat are the main areas of reform to improve Brazil’s innovation capacity?Improve education and training in new technologies 60.3%Increase tax incentives for innovative companies 29.7%Develop joint research programs 26.1%Develop a culture of innovation and creativity 17.1%Develop entrepreneurship 13.6%Develop venture capital and other Õnancial tools 8.3%Other 1.4%Cant say 8.0%Source: Ernst & Young 2012 Brazil attractiveness survey. Total respondents: 250.The Government of Brazil stimulates Brazil is also one of the most attractive @go]n]j$ :jYrad kladd dY_k Z]`af af alkinnovation through the Innovation Law in the countries for young entrepreneurs. hY[] g^ affgnYlagf& Al oYk jYfc] ,/l` afcountry.33 The law allows private companies Yet challenges such as high tax rates and l`] hmZda[Ylagf Zq AFK=9<$36 The Globallg ^mf hmZda[ afklalmlagfk lg [Yjjq gml j] lYh] o`]f klYjlaf_ Y Zmkaf]kk kladd Innovation Index 2011$ Z]`af gl`]j J?Ekj]k]Yj[` gf l`]aj Z]`Yd^& Al Ydkg ]f[gmjY_]k YZgmf ^gj qgmf_ ]flj]hj]f]mjk af :jYrad& km[` Yk l`] ;r][` J]hmZda[ */l`!$ ;`afYl`] hmZda[ Yf hjanYl] k][lgjk lg k`Yj] klY^^ The Government, however, has launched (29th) and Poland (43rd). RespondentsYf ^Y[adala]k km[` Yk dYZgjYlgja]k& programs over the years to provide in Ernst & Young’s Brazil attractiveness survey ÕfYf[aYd kmhhgjl lg klYjl%mh Õjek& Oal` 2012 said that Brazil will have to improveAf *((/$ :jYrad dYmf[`] Y f]o ^gmj%q]Yj an aim to help innovative new companies education and training in new technologiesscience plan with a view to strengthening in their initial phase of development, the (according to 60.3% of them), increase taxthe role of science, technology and Brazil Innovation Agency (FINEP) invests af[]flan]k ^gj affgnYlan] [gehYfa]k *1&/!$innovation. The plan included focusing on in a grant program called The PRIME and develop joint research programs (26.1%)strategic priorities such as increasing human Program (Primeira Empresa Inovadora). to enhance its innovation capacity.j]kgmj[]k af k[a]flaÕ[ j]k]Yj[`$ ]f`Yf[af_ Together with various local and foreigneducational infrastructure, and promoting ZYfcaf_ _jgmhk$ :F<=K `Yk [j]Yl] Y œ Improve education and training inafmkljaYd affgnYlagf Zq g^^]jaf_ lYp j]ZYl]k fund, Fundo Garantidor de Investimento, to new technologiesand funds to companies to undertake R&D stimulate lending to Brazilian SMEs. There Brazil needs to focus on improvingactivities. Brazil’s Ministry of Science and are also agencies to support innovation, education and training in new technologies.Technology (MCT) initiated the second such as The Brazilian Service to Support 9 dYj_] fmeZ]j g^ afn]klgjk [al] l`] dY[cphase of this plan for the period from 2011 Micro and Small Businesses (SEBRAE), of skilled workforce in the country asto 2014 to expand R&D in the nation. As which focus on promoting competitive Y hjgZd]e& L`] [gmfljqÌk kh]faf_ gfpart of this plan, the MCT will provide more Yf kmklYafYZd] ]n]dghe]fl g^ ea[jg Yf R&D needs to ramp up. In terms of R&D^mfk lg ÕfYf[] j]k]Yj[` Yf affgnYlagf af small enterprizes as well as on fostering as a percentage of GDP, Brazil rankedsmall and medium-sized enterprizes.34 entrepreneurship.35 +(l`$ Z]dgo gl`]j J?Ek km[` Yk l`] ;r][` J]hmZda[ *+j! Yf ;`afY *,l`! af33. “Government of Brazil and ECLAC Create Programme to Train Promoters of Science and Technology,” ECLAC website, www.eclac.cl, accessed 24 May 2012; “The many facets of innovation in Brazil,” Thomson Reuters website, +-& L`] Fa[] ;‘l] Ì9rmj *())$ =flj]hj]f]mjk`ah :Yjge]l]j thomsonreuters.com, accessed 26 May 2012. report, October 2011, Ernst & Young, 2011; “Brazil 36. Acronym for the French name “Institut Européen34. “Brazil economy: More stimulus,” The Economist Intelligence launches US$23b science plan,” Scidev.net website, d’Aministration des Affaires” or European Institute of Unit website, viewswire.eiu.com, accessed 23 May 2012. www.scidev.net, accessed 22 May 2012; infoDev. Business Administration.-* Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • the 2011 Innovation Index. The Government onshore (at least 8 of the 12 production agreements with several educationalis taking steps to improve this situation. steps in the case of light vehicles, and institutions, including the Federal 10 of the 14 production steps for heavy Mfan]jkalq g^ Jag ] BYf]ajg$ HgflaÕ[YdRecently, Brazil signed an agreement with vehicles); and undertaking energy- Catholic University of Rio de Janeirothe United Nations Economic Commission ]^Õ[a]f[q ]nYdmYlagfk ^gj Yl d]Ykl *- g^ and University of Campinas to develop^gj DYlaf 9e]ja[Y Yf l`] ;YjaZZ]Yf l`] n]`a[d]k& :q *()/$ [gehYfa]k oadd Z] projects in drilling and reservoir recovery(ECLAC) to provide training programs j]imaj] lg kh]f (&- g^ l`]aj j]n]fm] gf optimization. FMC Technologies partneredfor the promotion of new science, J<$ Yk o]dd Yk gmZd] l`]aj afn]kle]fl af with the Federal University of Rio detechnology and innovation policies in Latin engineering to 1% of revenue.37 BYf]ajg af *()( lg ]klYZdak` Y l][`fgdg_qAmerica. These programs are organized in center in Brazil.[ggh]jYlagf oal` mfan]jkala]k Yf k[a]flaÕ[ œ Develop joint research programs38research institutions. L`] :jYradaYf ?gn]jfe]fl `Yk Ydkg Z]]f The Government has signed cooperation undertaking measures to encourage agreements with different countriesœ Increase tax incentives for [ggh]jYlagf Z]lo]]f mfan]jkala]k Yf lg Zggkl [gddYZgjYlan] J< Y[lanala]k& innovative companies afmkljq& 9k Y aj][l j]kmdl$ */ g^ Ydd The Canada-Brazil Framework AgreementBrazil provides tax incentives to companies hYl]flk af :jYrad Yj] gof] Zq mfan]jkala]k& for Cooperation on Science, Technologyaiming to stimulate an environment of and Innovation, signed in 2010, allowsinnovation across the country and enhance Several foreign companies are undertaking Canada and Brazil’s industry, academiaits competitiveness in domestic as well research and innovation in Brazil through Yf ?gn]jfe]fl lg [gddYZgjYl] gf bgaflas foreign markets. In April 2012, the partnerships with universities in order to J< hjgb][lk$ k[a]flaÕ[ ogjck`ghk YfGovernment of Brazil announced four leverage the existing R&D infrastructure of conferences. Brazil also entered intocriteria for automakers to take advantage the country. Baker Hughes has cooperation an agreement with the EU in 2005 toof a reduction in vehicle tax. In order encourage cooperation in a wide range 37. É:a__]j :jYrad HdYf2 ).Z af lYp]k Zj]Yck lg Õ_`l kmj_af_ j]Ydlg Z][ge] ]da_aZd] ^gj dgo]j lYp]k$ Ymlg and cheap imports from China,” Forbes website, g^ k[a]flaÕ[ Yf l][`fgdg_a[Yd Yj]Yk.39companies will need to meet at least three www.forbes.com, accessed 22 May 2012. 38. “Brazil becoming, ‘the grown-up BRIC,’ according tog^ l`] ^gmj È o`a[` af[dm] afn]klaf_ Yl Thomson Reuters report,” Thomson Reuters website, thomsonreuters.com, accessed 22 May 2012; “Rice’s Bakerleast 0.15% of gross revenue in R&D; Institute to partner with Brazilian think tank Fundação 39. “Canada-Brazil Relations,” The Government of Canadaspending at least 0.5% of revenue on Getúlio Vargas,” Rice University news release, news.rice.edu, website, www.canadainternational.gc.ca, accessed 23 May accessed 29 March 2012; “Canada-Brazil Relations,” The 2012; “Policy framework: Brazil,” European Commission,]f_af]]jaf_3 ]klYZdak`af_ hjgm[lagf Government of Canada website, www.canadainternational. Research–International Cooperation website, ec.europa.eu, gc.ca, accessed 23 May 2012. accessed 23 May 2012. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum -+
    • Boosting growthAction 3: Promote Brazil’s regionsIn your opinion, what are the projects that best contribute to develop Brazilian cities’attractiveness and visibility to foreign investors?Major infrastructure projects 55.8%International sports events 27.4%Innovative business parks 22.1%International promotion campaigns 18.6%International cultural events 12.0%Established reference investors or personalities 8.1%None 2.3%Cant say4.7%Source2 =jfkl  Qgmf_ *()* :jYrad YlljY[lan]f]kk kmjn]q& Total respondents: 250.Investors consider infrastructure growth MK0/*&,Z :JD)&-1l! ^gj mh_jYaf_ Twenty-two percent of the respondentsa key attraction in Brazil. When asked the country’s infrastructure. This is expected `a_`da_`l] affgnYlan] Zmkaf]kk hYjck Yk YfYZgml hjgb][lk l`Yl ogmd af[j]Yk] l`] to result in further economic growth attraction to different cities in Brazil. Apartattractiveness of Brazil’s cities, infrastructure Yf _j]Yl]j afÖmp g^ ^gj]a_f afn]kle]fl from providing the much-needed facilities]n]dghe]fl oYk l`] Õjkl [`ga[] ^gj egj] into Brazil.40 ^gj ^gj]a_f afn]klgjk lg k]l mh l`]aj g^Õ[]k$than half of the respondents. these parks offer incentives in the form of The hosting of the forthcoming FIFA World low taxes.L`] :jYradaYf ?gn]jfe]fl `Yk Z]]f ;mh Yf Gdqeha[ ?Ye]k$ [al] Zq */&,mf]jlYcaf_ ka_faÕ[Yfl af^jYkljm[lmj] of investors, will also enhance Brazilian International promotion campaigns,spending as part of its multi-year PAC cities’ prospects. The Government plans k]d][l] Zq )0&. g^ l`] j]khgf]flk$program, aiming to promote growth to improve infrastructure across the cities have also driven investors toward differentZq [j]Ylaf_ Yf ]^Õ[a]fl Yf ]pl]fkan] hosting these events.41 Brazilian cities. Apex-Brasil, the country’sinfrastructure network across all regions trade and investment promotion agency,g^ l`] [gmfljq& H9; afb][l] MK*/.Z 40. “My House My Life Brazil,” Minha Casa Minha Vida website, organizes various seminars and forums to myhousemylifebrazil.com, accessed 24 May 2012; “PAC 2,” :JD-(+&1Z! af l`] Õjkl h`Yk] g^ l`] Brazil government website, www.brasil.gov.br, accessed 23 present the investment opportunities of thehjg_jYe$ *((/Ç)(& H`Yk] log g^ l`] May 2012. country to foreign investors. 41. “My House My Life Brazil,” Minha Casa Minha Vida website,hjg_jYe$ Zjgc]f gof aflg log h]jagk myhousemylifebrazil.com, accessed 24 May 2012; “PAC 2,” Brazil government website, www.brasil.gov.br, accessed 232011–14 and post-2014, allocates May 2012.-, Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum --
    • AppendixMethodology=jfkl  Qgmf_Ìk *()* :jYrad YlljY[lan]f]kk kmjn]q ak ZYk] gf Y log^gd e]l`ggdg_q l`Yl j]Ö][lk21 The attractiveness of Brazil to foreign investorsOur evaluation of the reality of FDI in However, every project has to create new inward investment projects are undertaken,:jYrad ak ZYk] gf ^<a EYjc]lk$ MF;L9< bgZk aj][ldq& Hjgb][l [j]Ylagf Yf fmeZ]j af o`a[` Y[lanala]k$ Zq o`ge Yf$ g^ [gmjk]$and Brazilian government sources such g^ bgZk _]f]jYl] Yj] oa]dq YnYadYZd] where. To map these real investments carriedas the Banco Central do Brasil. The fDi gf ><A& 9k ]Õf] YZgn]$ ><A af[dm]k out in Brazil, Ernst & Young used data fromEYjc]lk YlYZYk] ljY[ck f]o _j]]fÕ]d ]imalq [YhalYd$ j]afn]kl] ]Yjfaf_k Yf ^<a EYjc]lk& L`ak ak l`] gfdq gfdaf] YlYZYk]and expansion FDI projects. Joint ventures intracompany loans. However, many analysts ljY[caf_ [jgkk%Zgj]j _j]]fÕ]d afn]kle]flkare only included where they lead to a new Yj] egj] afl]j]kl] af imYfla^qaf_ hjgb][lk covering all sectors and countries worldwide.h`qka[Yd _j]]fÕ]d! gh]jYlagf& E]j_]jk in terms of physical assets, such as plant It provides real-time monitoring ofYf Y[imakalagfk E9! Yf gl`]j ]imalq Yf ]imahe]fl$ af Y ^gj]a_f [gmfljq& L`]k] afn]kle]fl hjgb][lk Yf bgZ [j]Ylagf oal`investments are not tracked. There is no Õ_mj]k$ jYj]dq j][gj] Zq afklalmlagfYd hgo]j^md lggdk lg ljY[c Yf hjgÕd] [gehYfa]keafaeme kar] ^gj Y hjgb][l lg Z] af[dm]& kgmj[]k$ hjgna] afnYdmYZd] afka_`lk Yk lg `go investing overseas.2 The perceptions of and outlook for Brazil and its competitors according to foreign investorsO] ]Õf] l`] YlljY[lan]f]kk g^ Y dg[Ylagf j]k]Yj[` oYk [gfm[l] Zq ;K9 Afklalml] o]j] a]flaÕ] mkaf_ <mf  :jYklj]]lYk Y [geZafYlagf g^ aeY_]$ afn]klgjkÌ in May 2012, via telephone interviews, >Yeadq Lj]] Yf n]jaÕ] l`jgm_` afanamYd[gfÕ]f[] Yf l`] h]j[]hlagf g^ Y [gmfljq ZYk] gf Y j]hj]k]flYlan] hYf]d g^ *-( [gehYfq o]Zkal]k& <mf  :jYklj]]l ak gf]gj Yj]YÌk YZadalq lg hjgna] l`] egkl international decision-makers. The g^ l`] ogjdk d]Yaf_ Yf dgf_]kl%]klYZdak`][geh]lalan] Z]f]Õlk ^gj ><A& L`] Õ]d companies with international development Zmkaf]kk af^gjeYlagf [gehYfa]k&Profile of companies surveyed Profile of companies surveyed Profile of companies surveyedGeography BgZ lald] Respondents per sector Others Latin America Finance directors Sector RespondentsNorthern Europe 1% 3% 49% Industry, automotive, energy ,) 4% Marketing and Commercial director Consumer *- Asia 22% Private and business services )/ 12% Managing director/SVP/COO Chemical and pharmaceutical )( 7% industries Director of Development Telecommunication infrastructures / 32% 7% and equipments, high-technology North America equipment Others 48% Western Europe 16%Profile of companies surveyedTurnover Less than More than US$204m US$2.04b 31% 27% 42% Between US$205m and US$2.04b-. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum -/
    • Ernst & Young in BrazilErnst & Young is a leader in advisory, tax, assurance and Our key market sectors are oil and gas, mining & metals, consumerljYfkY[lagfk af :jYrad& =klYZdak`] af )1-($ gmj :jYrad hjY[la[] products, telecommunications and construction.is comprised of a team of 4,500 professionals in 12 cities.Gmj h]ghd] ogjc lgoYj l`] gj_YfarYlagfÌk nakagf g^ Z]af_ We are recognized as the leader in the professional servicesY ljmkl] Zmkaf]kk Ynakgj l`Yl [gfljaZml]k lg l`] km[[]kk g^ industry and distinctions we receive encourage us to continuealk [da]flk Zq [j]Ylaf_ [gfÕ]f[] Yf nYdm]& striving for excellence.Ernst & Young teams up with companies with high potential =jfkl  Qgmf_ :jYrad `Yk Z]]f ]d][l] ^gj log [gfk][mlan]for growth and is dedicated to effectively helping them identify q]Yjk Yk gf] g^ l`] :]kl ;gehYfa]k lg KlYjl Y ;Yj]]j Zq gf]Yf [YhalYdar] gf Zmkaf]kk ghhgjlmfala]k af :jYrad Yf l`] ogjd& of the most important magazines in Brazil, Exame/Você S/A, while the Ernst & Young University is recognized as one of?jgoaf_ eYjc]lk j]imaj] affgnYlan] l`afcaf_ Yf ]ngdnaf_ l`] Z]kl [gjhgjYl] mfan]jkala]k af :jYrad&hjY[la[]k ^gj Zmkaf]kk]k lg km[[]]& EYfq d]Yaf_ :jYradaYfand multinational companies have chosen Ernst & Young Af *()*$ =jfkl  Qgmf_ oYk l`] Õjkl gj_YfarYlagf af l`] hjg^]kkagfYdto advise them on the most demanding aspects of the fast- services segment to reach the top level of transparency in governance]ngdnaf_ Zmkaf]kk [daeYl]& =jfkl  Qgmf_ hjgna]k k]jna[]k Yf ]fnajgfe]flYd$ kg[aYd Yf ][gfgea[ h]j^gjeYf[] af alk Õjkllg Y dYj_] fmeZ]j g^ d]Yaf_ :jYradaYf Yf emdlafYlagfYd kmklYafYZadalq j]hgjl$ af Y[[gjYf[] oal` l`] ?dgZYd J]hgjlaf_companies. Initiative (GRI) guidelines.-0 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • œ Our publications Sustainability Report Sustainable Brazil series œ 2011 œ An outlook on the oil, ethanol and gas markets Af gmj Õjkl kmklYafYZadalq j]hgjl$ we present the most salient information L`] KmklYafYZd] :jYrad k]ja]k hjgna]k on our activities in Brazil as well as on wellgrounded projections on the main the policies and tools which guide our daily sectors of the Brazilian economy including activities. We also set forth the principles analyses and perspectives on the housing, and procedures which orient the company’s energy, consumer products, industrial corporate governance, management and Yf Y_jaZmkaf]kk afmklja]k$ Yk o]dd Yk relations with its stakeholders. a special study on the World Cup 2014 and the Oil & Gas sector. Rapid-growth markets forecast Ernst & Young’s 2012 European attractiveness survey œ Summer edition, July 2012 œ Growth, actually Gmj YfYdqkak af l`ak imYjl]jÌk JYha%_jgol` markets forecast suggests that rapid-growth Despite the fragility of the Eurozone markets are likely to weather the ongoing economy, inward investment continued to =mjgrgf] [jakak Yf j]eYaf ]f_af]k g^ _dgZYd jak] af =mjgh] af *())$ oal` l`] lglYd fmeZ]j growth, though many will see expansion g^ hjgb][lk ka_faÕ[Yfldq `a_`]j l`Yf hj]%[jakak slow this year. Their expansion is expected levels. That’s according to Ernst & Young’s to accelerate once more in 2013, helping 10th annual European Attractiveness stimulate a wider pick-up. Survey, which examines Europe’s attractiveness for foreign direct investors. Ernst & Young’s 2012 Africa Ernst & Young’s 2012 India attractiveness survey attractiveness survey œ Building bridges œ Ready for transition This survey analyzes Africa’s attractiveness Foreign investors see India as an attractive as an investment destination, providing investment option, despite the uncertain an overview of Africa’s strengths and _dgZYd ][gfgea[ [daeYl] Y[[gjaf_ lg =jfkl challenges, as well as an outlook for FDI into & Young’s 2012 Indian Attractiveness a selection of African countries. It highlights Kmjn]q$ o`a[` [geZaf]k Yf YfYdqkak g^ that despite a surge in FDI across the FDI into India, along with a survey of continent, negative perceptions of Africa _dgZYd ]p][mlan]k gf l`]aj na]ok YZgml l`] daf_]j Yegf_ l`gk] fgl q]l gaf_ Zmkaf]kk potential of the Indian market. on the continent. Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum -1
    • 60 Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum
    • Ernst & Youngs 2012 Brazil attractiveness survey Capturing the momentum C
    • Ernst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & Young Contacts=jfkl  Qgmf_ ak Y _dgZYd d]Y]j af YkkmjYf[]$ lYp$ ljYfkY[lagf Antonio Vitaand advisory services. Worldwide, our 152,000 people are united South America & Brazil Advisory Managing PartnerZq gmj k`Yj] nYdm]k Yf Yf mfoYn]jaf_ [geeale]fl lg imYdalq& L]d&2 # -- )) *-/+ +/(/O] eYc] Y a^^]j]f[] Zq `]dhaf_ gmj h]ghd]$ gmj [da]flk Yf gmj =%eYad2 Yflgfag&nalY8Zj&]q&[gewider communities achieve their potential. Marly Parra=jfkl  Qgmf_ j]^]jk lg l`] _dgZYd gj_YfarYlagf g^ e]eZ]j ^ajek =p][mlan] <aj][lgj È EYjc]laf_ <]hYjle]flg^ =jfkl  Qgmf_ ?dgZYd Daeal]$ ]Y[` g^ o`a[` ak Y k]hYjYl] Tel.: + 55 11 3054 0445d]_Yd ]flalq& =jfkl  Qgmf_ ?dgZYd Daeal]$ Y MC [gehYfq daeal] =%eYad2 eYjdq&hYjjY8Zj&]q&[geZq _mYjYfl]]$ g]k fgl hjgna] k]jna[]k lg [da]flk& >gj egj] Ines Hotteaf^gjeYlagf YZgml gmj gj_YfarYlagf$ hd]Yk] nakal ooo&]q&[ge& Media Relations Manager© 2012 EYGM Limited. Tel.: +55 11 3054 0419All Rights Reserved. =%eYad2 af]k&`gll]8Zj&]q&[geEYG No. AU1256 Sandra Sasson Marketing and Communications Director In line with Ernst & Young’s commitment to minimize Emerging Markets Center alk aehY[l gf l`] ]fnajgfe]fl$ l`ak g[me]fl `Yk Z]]f Tel: +30 (0)210 2886 032 printed on paper with a high recycled content. Email: sandra.sasson@gr.ey.comL`ak hmZda[Ylagf [gflYafk af^gjeYlagf af kmeeYjq ^gje Yf ak l`]j]^gj] afl]f] ^gj Bijal Tanna_]f]jYd _maYf[] gfdq& Al ak fgl afl]f] lg Z] Y kmZklalml] ^gj ]lYad] j]k]Yj[` gjl`] ]p]j[ak] g^ hjg^]kkagfYd bm_e]fl& F]al`]j =Q?E Daeal] fgj Yfq gl`]j e]eZ]j ?dgZYd E]aY J]dYlagfkg^ l`] _dgZYd =jfkl  Qgmf_ gj_YfarYlagf [Yf Y[[]hl Yfq j]khgfkaZadalq ^gj dgkk L]d2 #,, (!*( /1-) 00+/occasioned to any person acting or refraining from action as a result of any material =eYad2 ZlYffY8mc&]q&[geaf l`ak hmZda[Ylagf& Gf Yfq kh][a^a[ eYll]j$ j]^]j]f[] k`gmd Z] eY] lg l`]appropriate advisor.L`] ghafagfk g^ l`aj hYjla]k k]l gml af l`ak hmZda[Ylagf Yj] fgl f][]kkYjadq l`] ghafagfkg^ l`] _dgZYd =jfkl  Qgmf_ gj_YfarYlagf gj alk e]eZ]j ^ajek& Egj]gn]j$ l`]q k`gmdZ] k]]f af l`] [gfl]pl g^ l`] lae] l`]q o]j] ]phj]kk]&EMEIA MAS E021.0612ED NoneGrowing BeyondIn these challenging economic times,opportunities still exist for growth.In Growing Beyond, we’re exploring`go [gehYfa]k [Yf Z]kl ]phdgal l`]k]ghhgjlmfala]k È Zq ]phYfaf_ aflgf]o eYjc]lk$ Õfaf_ f]o oYqk lginnovate and taking new approachesto talent. You’ll gain practical insightsinto what you need to do to grow.Bgaf l`] ]ZYl] Yl ooo&]q&[ge_jgoaf_Z]qgf&