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.

1. Growing Beyond
Capturing the momentum
Ernst & Young's 2012 attractiveness survey
Brazil

2. Emerging Markets Center
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please visit: http://emergingmarkets.ey.com

3. Capturing the momentum
Ernst & Young's attractiveness survey 2012
Brazil
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 & Young's 2012 Brazil attractiveness survey Capturing the momentum 1

4. 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 Young's 2012 Brazil attractiveness survey Capturing the momentum

5. Foreword
Foreword
Tom McGrath Jorge Menegassi
Americas Senior Vice Chair — Markets CEO, South America Brazil
Ernst Young Ernst Young
Brazil has come on in leaps and bounds to become a stable We believe that the next phase of foreign direct investment
economy. Despite the risks of an appreciating currency, (FDI) competition will target less tapped activities such as
the domestic market, driven by a burgeoning middle class, establishment of headquarters, research and development
has continued to be the backbone of the Brazilian economy. (RD) centers and innovative business services, driven by
The 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 over
Brazil leads the attractiveness scores in Latin America with the next three years. Investors perceive Brazil will be a leader
almost 7 out of 10 business leaders declaring the country in the energy sector by 2020 with substantially improved
as the most attractive place to establish operations. Rising infrastructure, and they expect improvement in the education
domestic consumption of goods and services, and a wide base system to bridge the skills gap and develop innovation
of industrial and natural resources are the foundation capacity. Also, hosting the FIFA World Cup in 2014 and the
of Brazil’s economy. Rio Olympic Games in 2016 is bound to attract international
investors across a range of sectors. But Brazil also has to
Brazil’s image as a commodity-rich nation attracts foreign make efforts to ensure a secure and smooth operational
investment, which creates challenges such as the unwelcome environment, increase transparency, reduce corruption and
side 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 effects
of being commodity rich, the Government needs to continue Gmj Õjkl ]alagf g^ l`] Brazil attractiveness survey includes
to implement measures to diversify the economy toward a section on Brazil’s next phase of growth — driven by industry
nYdm]%Y] Yf affgnYlan] Y[lanala]k Afkm^Õ[a]fl imYdaÕ] and the services sectors, as well as an analysis of the key
personnel, high interest rates and a complicated tax system growth sectors, which we believe will drive FDI momentum
are some other main challenges the Brazilian economy in the country.
is facing.
We would like to thank all the decision-makers and
In terms of regional priorities, São Paulo clearly appeals most Ernst Young professionals who have taken the time to
lg 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^ Yf
promotion 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 Young's 2012 Brazil attractiveness survey Capturing the momentum 3

6. Executive summary
Executive summary
World economy outlook The reality of foreign investment in Brazil
Hope, actually A record year
œ 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^ A
with 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] ).)$).. bgZk
the drivers of growth and recovery. The group of 25 RGMs we monitor
Yl =jfkl Qgmf_ Yk Y o`gd] Yj] ]ph][l] lg Zgmf[] ZY[c lg Y[`a]n] œ Manufacturing brings 75% of the jobs, services bring 52% of
an overall GDP growth of 5.9% in 2013 and 6.5% in 2014. Forecasts the projects
Zq l`] Afl]jfYlagfYd Egf]lYjq mf AE! af alk imYjl]jdq mhYl] Afn]klgjk ]fl]j] :jYrad lg ]klYZdak` ^Y[lgja]k Yk o]dd Yk lYh l`]
hjgb][l l`] _dgZYd ][gfgeq lg ]phYf Zq +- Yf +1 af *()* rapidly growing services sector in 2011. While industrial activity
and 2013 respectively. `Yk Zjgm_`l l`] egkl bgZk /- g^ l`] lglYd bgZk!$ 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 for
prevails 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 lg
US$1.5t, according to the United Nations Conference on Trade and œ Where from?
]n]dghe]fl MF;L9! A afÖgok Zgmf[] ZY[c af Ydd eYbgj The US, UK, Japan, Germany and Spain accounted for 59% of the
economic groups: developed, developing and transition economies. FDI projects in 2011. China is emerging as a strong partner of
L`] MF;L9 ]klaeYl]k l`Yl A Ögok oadd jak] eg]jYl]dq af *()* lg :jYrad$ 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 ljYfkfYlagfYd
corporations. 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 Young's 2012 Brazil attractiveness survey Capturing the momentum

7. Brazil, the investors’ view The future of attractiveness in Brazil
Great momentum Boosting growth
œ Brazil: the continent’s most attractive market œ Action 1: improve skills and secure the operational environment
Seventy-eight percent of the survey respondents named Brazil as Of the survey respondents, 28.8% see the development of education
the 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 sectors
j]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 increase
œ An energy leader in the making lYp af[]flan]k ^gj affgnYlan] [gehYfa]k *1/! Yf ]n]dgh bgafl
Brazil’s oil and gas sector will drive the country’s growth in the research programs (26.1%). These measures will help develop
coming 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 regions
œ 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^ :jYradÌk
factor 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]kk
will 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 Brazil's
innovation capacity.
56% of business leaders think infrastructure development
is the priority to increase the attractiveness of Brazilian
second cities.
Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum -

8. Executive summary
Picture: panoramic view of tropical beach, Fernando de Noronha.
Cover picture: sandy coastline, Brazil.
6 Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum

9. Brazil fact sheet
Capital Administration Bordering countries
Brasília, Brazil consists of 26 States Argentina, Bolivia, Colombia, French
located 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 BMFBOVESPA
(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 Young's 2012 Brazil attractiveness survey Capturing the momentum 7

10. World economy
outlook
Hope, actually
;geaf_ gml g^ l`] ÕfYf[aYd [jakak$ Although many RGMs are likely to witness National and regional differences do exist
the global economy started 2011 in kdgo]j ]phYfkagf af *()* Yl ,1$ l`]k] among emerging market economies, and
recovery 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 to
some 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 and
slow down in the second half of the year as a whole should bounce back to achieve the Americas region that are expected
with 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 are
and 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 among
European Monetary Union, continued high emerging markets will help further insulate The IMF in its July 2012 quarterly update
sovereign debt and respective austerity economic development from unfavorable projects that the global economy will
programs now showing their real impact developments in the western hemisphere. ]phYf Zq +- Yf +1 af *()* Yf
on GDP growth are the main forces holding Those developing markets that rely on *()+ j]kh][lan]dq$ n]jkmk l`] +- Yf
back 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 projected
Rapid-growth economies recently showed outlook remains strongly positive as energy GDP growth rates for both major Western
some 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 growth
g^ l`] ÕfYf[aYd [jakak Yf$ egj] j][]fldq$ remain strong as Western companies are expectations in the West and around half
reduced 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 are
goods 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 Young's 2012 Brazil attractiveness survey Capturing the momentum

11. World economy outlook
Picture: 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 2013
Sources: World Economic Outlook (WEO): Growth resuming, dangers remain, April 2012, IMF 2012. Rapid-growth markets forecast, Ernst Young, July 2012.
Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum 9

12. World economy outlook
Positioning Brazil in the world economy
Goaf_ lg :jYradÌk eY[jg][gfgea[ klYZadalq However, in the medium term, growth measures in the pipeline on the upside. Other
and growing domestic demand, the country is projected to pick up to 5.1% in 2013 and factors such as the country’s increasing trade
has withstood the waves of crisis with ,0 af *(),$ jan]f dYj_]dq Zq ge]kla[ with China and any uplift in the US economy
resilience.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’s
j]Zgmf] af j]khgfk] lg _gn]jfe]fl the Government, will provide further impetus. YeZalagmk _gYdk ^gj ][gfgea[ _jgol` gn]j
stimulus 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[mk
GDP 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`] ][gfgeq
2. 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 prevails
Global FDI inflows Despite the world economic turmoil, In developed economies, much of the
(US$t) l`] lglYd _dgZYd afÖgok g^ A jgk] Zq _jgol` af A j]kmdl] ^jge [jgkk%Zgj]j
). af *()) È ^jge alk Yeall]dq dgo MAs, particularly within Europe. FDI
2.0
ZYkak af *()( È lg MK)-l$ 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][lk
Source: UNCTAD. developing countries’ rise was supported of underlying factors, including GDP
Note: this data includes greenfield and expansion
projects and MAs.
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 Young's 2012 Brazil attractiveness survey Capturing the momentum

13. Viewpoint
The Rio 2016 Olympics:
a great source for investment opportunities
Márcio Fortes$ Hj]ka]fl g^ Gdqeha[ HmZda[ 9ml`gjalq
By hosting a succession of high-profile related to the Olympics — respecting for each individual sport, such as
global events over the next four years, deadlines and basic requirements from canoe slalom, which requires complex
Brazil will enhance its standing in the the IOC and the 41 international sports hydraulic engineering that cost £90m
international arena. They are “Rio+20,” federations involved with the event. at the London Olympics. “Without
the 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 everything
Confederations Cup in 2013, the FIFA to demonstrate that the city has must be ready a year in advance for test
World 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 provide
been 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, technical
International 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 and
A study conducted by the Foundation the revitalization of Rio de Janeiro’s port, brand new legislation has encouraged
Institute of Administration (FIA) where the harbor will be deepened to the construction of hotels. There are
estimates that public and private receive up to six tourist ships; and the also major opportunities in transport
investments in the games infrastructure urban mobility projects such as the Bus and restaurants, and there is an urgent
will inject US$14.4b into the country — Rapid Transit (BRT) that will link the four demand for qualified manpower to meet
Jag ]kh][aYddq È aehY[laf_ -- a^^]j]fl different competition areas in the city. visitors’ demands. The Olympics also
sectors of the economy. Preparations for require expert advice in the construction
the games are overseen by the Olympic Other essential projects for the Olympic of facilities, creating opportunities for
Public Authority (APO), a public Games include the creation of a media associations between Brazilian and
consortium that brings together federal, center and broadcasting facilities, foreign companies and the arrival of
state 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 and
deliver the infrastructure and services athletics stadium, as well as facilities
Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum 11

14. A record year
The reality of foreign investment in Brazil
Picture: Ibicui river and landscape, Brazil.
12 Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum

15. 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 Young's 2012 Brazil attractiveness survey Capturing the momentum 13

16. A record year
Performance 2011:
FDI in Brazil reaches a record level
Number 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 2011
Source: 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 workforce
growth 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]kk
pace 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`] FYlagfYd
Kaf[] *((/$ l`] fmeZ]j g^ A hjgb][lk trajectory and the wealth of natural resources Industry Confederation (CNI), 69% of
has 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 ak
Yf *()($ 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 workers
af[j]Yk]$ l`] jakcq _dgZYd ][gfgea[ investors who might seek to locate personnel _Yafaf_ imYdaÕ[Ylagfk L`] hjgZd]e ak
outlook kept the value invested relatively in the country. particularly acute in the case of companies
low. 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 undertaken
to US$120m in 2010, mainly due to increase of 39% over 2010 and the highest Zq :jYradk ^gje]j Hj]ka]fl DmdY Y KadnY
investors’ unwillingness to commit large growth rate achieved among the countries have improved access to education in the
amount of funds, then increased slightly on the list. It ranked second in terms of country. Further, ruling President of Brazil
to US$124m in 2011. A nYdm]$ Z]`af ;`afY Yf Y`]Y g^ AfaY$ Dilma Rousseff's focus on enhancing Brazil's
the US and the UK. The average value of a higher education is expected to create a
A 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 (Bigger
natural resources has placed Brazil as a (US$63m). In comparison with its Latin :jYrad! dYmf[`] Zq l`] ?gn]jfe]fl g^
c]q afn]kle]fl ]klafYlagf Yegf_ _dgZYd American peer group, Brazil clearly stands Brazil in 2011, that focus on increasing
companies with an emerging market-focused out with our survey suggesting that Brazil the country’s competitiveness, enhancing
portfolio. Supportive government policies, `Yk Zq ^Yj l`] `a_`]kl YoYj]f]kk Yegf_ productivity, raising investments and
including tax incentives for foreign investors foreign investors. stimulating technological innovation, should
targeting local production and content, j]af^gj[] afn]klgjk [gfÕ]f[] af l`] ea lg
4. “Emerging Markets: Brazil and Chile,” Frost Sullivan
kaehdaÕ[Ylagf g^ da[]fkaf_ hjg[]mj]k Yf website, www.frost.com$ 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 Young's 2012 Brazil attractiveness survey Capturing the momentum

17. 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 the
High interest rates and a complicated tax L`] :jYradaYf ][gfgeq ak Z]f]Õlaf_ commodity-rich status is the draining
system also remain key concerns for the ka_faÕ[Yfldq ^jge alk [geegalq Zgge$ of resources away from other industry
economy. Brazil’s growth stalled in the which attracts foreign investment and sectors. The shortage of talent coupled
second half of 2011 mainly due to the makes the economy thrive. However, this with the strong Brazilian real creates an
la_`l]j egf]lYjq Yf Õk[Yd hgda[a]k Yghl] also leads to an unwelcome side effect additional risk of deindustrialization of
Zq 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 dependence
ZYfc ak fgo mf]jlYcaf_ e]Ykmj]k lg hmlk Y `m_] Zmj]f gf l`] ]phgjl on commodities, the Government needs
stimulate investment and to spur economic competitiveness of the country, with to undertake initiatives to diversify the
growth through measures such as interest many of its manufacturers struggling to economy and create a push toward
rate reductions, tax cuts and a relaxation of remain competitive on the world stage. developing and promoting value-added
ZYfc d]faf_ j]imaj]e]flk5 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 Young's 2012 Brazil attractiveness survey Capturing the momentum )-

18. A record year
FDI 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 value
FDI projects
Industrial activities bring jobs
During 2011, investors committed Brazil’s strong position in the minerals Over the past decade, Brazil has
MK.*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 )*($//, bgZk /- g^ can easily target the domestic population country will have to look to other areas
l`] [gmfljqÌk lglYd g^ f]o A bgZk!$ oal` oal` _jgoaf_ akhgkYZd] af[ge] for development to diversify further and
Yf 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, including
always made Brazil attractive for industrial the recent discovery of the pre-salt layer infrastructure, along with a strong culture
activities. The country ranks sixth in the off the coast of Southern Brazil. Real estate of entrepreneurship, will help to drive a shift
ogjd af dYZgj ^gj[] kar] @go]n]j$ m] lg and construction came next, creating from commodities toward manufactured
its long reliance on commodities and imports an expectation that large infrastructure goods. Between 2011 and 2014, Brazil’s
of manufactured goods, FDI in industrial hjgb][lk oadd Z] hml af hdY[] gn]j l`] f]pl National Economic and Social Development
activity 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 will
When investing in industrial projects in consumer products, mining, transportation receive a total investment amounting to
Brazil, 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!$ Yf
and metals (20 projects). During 2011, note, showing potential not only for oil infrastructure and construction projects are
the 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.6
Ymlgeglan] [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 Young's 2012 Brazil attractiveness survey Capturing the momentum

19. Services bring the projects
Brazil received 262 support services @go]n]j$ l`]k] hjgb][lk dY[c af Zgl` k[Yd] services projects, dominating the sector
projects in 2011, recording the highest and size, costing investors on average and providing evidence of Brazil’s growing
growth rate (53%) and accounting for 52% MK.-e Yf [j]Ylaf_ YZgml /1 bgZk h]j importance among vendors across the
of 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[]k
k][lgj af :jYrad ak jan]f Zq alk dYj_] mjZYf œ Sales, marketing support recorded œ Business services continue to
population (80%) compared with some the highest share within services sector attract investors
other 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 -, -+ +$-+( mf]j l`] meZj]ddY g^ Zmkaf]kk k]jna[]k
Business services 44 71 */ .) 3,218
Business services recorded a growth of 61%
Design, development testing 12 23 1 1* 6,091
in FDI projects during 2011 on account
Customer contact center - 3 ) %,( 3,729
of increased perception of Brazil as a hot
Technical support center 3 1 (, %./ 206
]klafYlagf ^gj Zmkaf]kk k]jna[]k 9[[gjaf_
Maintenance servicing 3 3 ) - 131
to a 2011 European Commission study,
ICT internet infrastructure 11 20 0 0* 3,791
Shared services center 1 - - %)(( -
d]Yaf_ ^gj]a_f AL Õjek Y[[gmfl] ^gj
Services total 171 262 100% 53% 20,696 40% of the industry’s revenues.
Source: fDi Intelligence.
Strategic functions: shaping the future of Brazil’s attractiveness
Brazil still needs to improve on its kh]fk ) g^ alk ?H gf j]k]Yj[` È `Yd^ l`] environment and government focus on
attractiveness for strategic functions. ]n]dgh] ogjdÌk jYl]$ Zml Ydegkl gmZd] RD functions. Brazil’s BNDES also supports
In 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 RD.
[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 Brazil
growth 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 investors
talent, resulting from the country having conditions, more companies are expected setting up production facilities to cater to
historically neglected to invest in education lg k]l mh `]YimYjl]jk af :jYrad 9dkg$ Yk the growing demand in the country. Sales
Yf 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]k
focusing on RD and investing in training lg j]_agfYd g^Õ[]k$ :jYrad `Yk Yf ghhgjlmfalq to operate successfully in Brazil’s domestic
Yf ]m[Ylagf lg Z][ge] Y cfgof hdYq]j af lg YlljY[l egj] A `]YimYjl]jk hjgb][lk market. Foreign investors, however, do not
l`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, Brazil
7. “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 Young's 2012 Brazil attractiveness survey Capturing the momentum 17

20. A record year
FDI by sector
Leading sectors of FDI In transition Lagging behind
œ ICT and manufacturing œ Financial services œ Real estate, hospitality and
ICT 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 construction
105 and 94 FDI projects respectively, in hjgb][lk af *()( =n]f l`gm_` ^gj]a_f ZYfck sector attracted 12 FDI projects, and created
2011. 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 to
has 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 in
œ Business services in the world, this sector in Brazil provides 2016. However, of all the host cities, only Rio
Business 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 during
of FDI projects, up from 8% in 2010. œ Automotive these sporting events, with other cities facing
L`] 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]flk8
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 producer
country’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 Brazil's demand for energy
sector 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 RD 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 62,916
Source: fDi Intelligence. 8. Sustainable Brazil, 2011, Ernst Young, 2011.
18 Ernst Young's 2012 Brazil attractiveness survey Capturing the momentum

21. Sector focus
ICT*
Software IT services; communications; semiconductors
FDI value and number of projects Number of jobs
FDI projects (number) 17,724
FDI value (US$b)
105
69
14.8 8,571
53 7,827
49 47
10.6
6.4 3,621
2,907
2.4
1.3
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Source: fDi Intelligence. Source: fDi Intelligence.
Growth 2011 vs. 2010: +52.2% FDI projects +106.8% No. of jobs +130.5% FDI value
ICT in Brazil attracted 105 FDI projects Other government measures are also
af *())$ *) 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 since
in 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 in
Brazil’s ICT sector is the world’s seventh Tata Consultancy Services. the country. According to the Brazilian
largest and is the leader in Latin America. Association of Information Technology
L`] FYlagfYd :jgYZYf HdYf$ gh]faf_ The telecoms market also has large, and Communication (Brasscom), the
l`] [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 strategic
IT products and services. The Brazilian Brazil’s IT market has a distinct regional partnership with Brazilian business
Government’s targets for 2014, which structure, with most of the spending group EBX Group. Under the terms of
af[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 EBX
in 80% of the metropolitan areas; and 100% high dependence on imported electronic Group, with a focus on the oil and gas
telephony coverage in rural areas, will act components and a shortage of skilled operations sectors. The companies
as key drivers for infrastructure investments workforce. These challenges have put would also work together to launch a
going 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 Young's 2012 Brazil attractiveness survey Capturing the momentum 19

22. 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 Young's 2012 Brazil attractiveness survey Capturing the momentum

23. Sector focus
Business services*
Business services; leisure entertainment
FDI value and number of projects Number of jobs
FDI projects (number)
4,316
FDI value (US$b)
53
37 2,484
2,250
29 2,043
23 0.7
9
0.2 0.2 353
0.1 0.1
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Source: fDi Intelligence. Source: fDi Intelligence.
Growth 2011 vs. 2010: +82.8% FDI projects -9.2% No. of jobs +309.8% FDI value
:jYradÌk Zmkaf]kk k]jna[]k k][lgj YlljY[l] funding for companies focusing on RD, such as HCL, Wipro, Teleperformance,
53 projects in 2011 with an FDI value Ydgf_ oal` Y kmj_af_ fmeZ]j g^ l][`fgdg_q Genpact and Sitel, have their customer
lglYdaf_ MK(/Z$ [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 for
sector 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_`%imYdalq
functions such as sales, marketing and Brazil to focus on local customers and on properties in São Paulo, Rio de Janeiro
support; education and training; ICT and serving the wider Latin American market. and other major state capitals has led to
internet 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$ Yf
ZYk] ^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 Young's 2012 Brazil attractiveness survey Capturing the momentum 21