presentació brazil 2012 attractiveness survey

Capturing the momentum

Ernst & Young's 2012 attractiveness survey

Brazil

Brazil attractiveness survey 2012

FDI in Brazil reached record levels in 2011

165

268 289

366

507

2007 2008 2009 2010 2011

48.901

124.125

88.430

127.406

161,166

2007 2008 2009 2010 2011

19,0

47,0 44,5 44,0

62,9

2007 2008 2009 2010 2011

Number of FDI projects Jobs created FDI by value (US$ billion)

Source: fDI intelligence

► Continuous rise in FDI

projects since 2007.

► 39% increase in the number

of FDI projects since 2010.

► 27% increase in jobs

generated through FDI

projects.

► Around 75% of the FDI

jobs were directed toward

industrial activity.

► 43% increase in FDI value.

► Average value of a project

in Brazil is US$124m –

higher than in China

(US$71m) and India

(US$63m).

Source: fDI intelligence Source: fDI intelligence


► The US and Japan are the leading investors in Brazil, with the US

taking the lead in terms of projects.

► The US had a share of 29.4% in FDI projects during 2011, Japan

had 7.1%.

US, UK and Japan are leading investors - China emerging

Developed

world

investors

► The UK is the largest European investor in Brazil with projects

doubling from 20 in 2010 to 45 in 2011.

► The UK originated the highest number of jobs from Europe and

second largest globally in 2011.

European

investors

► China is emerging as a strong investor in Brazil.

► Fifth-largest in terms of FDI value (a six fold increase since

2010);

► Fifth in terms of number of jobs created.

.

Emerging

world

investors


Where is Spain ?


Investors come to Brazil for services and manufacturing



Positionning Brazil in FDI competition ?


Southeast is the primary geographic focus

► The Southeast region attracted 901

projects between 2007 and 2011.

► Creating more than 250,000 jobs.

► Accounting for more than 55% of FDI

projects.

► The projects were mainly directed

toward ICT, manufacturing, business

services and retail sectors.

► The South region has attracted 115

projects between 2007 and 2011

► Creating more than 48,000 jobs.

► Northeast shows promise for the future


North

Northeast

Midwest

Southeast +

South +

11 12

21 23

201 278

30 39

9 11

2010 2011

+ Well-developed infrastructure

- Infrastructure bottlenecks

Barcarena 1

Belem 1

Macae 2

Rio de Janeiro 7

Sao Paulo 16

Curitiba 2

Santa Cruz 1

FDI projects by destination city (2011)

Number of UK FDI projects


Emerging tier-two cities

Next coming ? Florianopolis South / Suape Northeast / Brasilia Midwest ?

Brazil – inside the mind of investors


Methodology


Brazil: Latin America’s leader ?


Brazil is the Latin American leader

► 78.4% of investors see Brazil as the most attractive country for investment in

Latin America. Why? ► Robust economic foundations

► Burgeoning middle class

► Rising domestic consumption for goods and services

► Wide base of industrial and natural resources

► Higher awareness among investors with relation to other Latin American

countries

► More mentions than any other country

► Competition from the emerging and developed countries ► Respondents (49%) believe that China is Brazil’s largest competitor, followed

by India (14%) and the US (10%)


What factors make Brazil an attractive investment destination?

Brazil’s domestic market is the primary attraction

► 86.5% cited Brazil’s domestic market.

► 76% cited quality of life, culture, social environment and language.

► 72.8% cited telecommunications infrastructure.

► 71.9% cited entrepreneurial culture.

► Brazil has recently been ranked as the third-best country among the G20 at providing young

entrepreneurs with a favorable environment for business.

Strengths

► Labor skills: The country still lags behind the G20 average in terms of university education and

R&D.

► Environment and operational costs: A low-quality and high-cost transportation system still

remains a weak factor for investors (only 43.4% mentioned it as an attraction) because it

leads to operational inefficiencies.

► High labor costs compared with other RGMs such as Russia, China and Mexico, along with

rigid and inflexible labor regulations, continue to raise concerns for foreign companies.

Opportunities


Brazilian cities: the undisputed leadership of …


Next coming ?


Routes for the future


Over the next three years, do you think the

attractiveness of Brazil as a place for your company to

establish or develop activities will …?

Boosting growth, especially with 2014 World Cup and 2016 Olympics

Source: Ernst & Young 2012 Brazil attractiveness survey.

Total respondents: 250

Which three of the following business

sectors do you perceive as driving Brazil’s

growth in the next 2 years?

Oil & gas

Real estate and construction

Tourism

Agriculture and food industry

Transports industry and automotive

Consumer goods

Mining

Information and communication

technologies, IT

Logistics and distribution channels

B to B services excluding finance (IT

service, consulting, audit,

communication, etc.)

Bank/Finance/Insurance

Clean techs

The pharmaceutical industry and

biotechnologies

Utilities

Heavy industry

None

Can't say

► Pre-salt discoveries are expected to drive growth in

the oil and gas sector, BUT the 2014 FIFA World

Cup and the 2016 Olympic Games will boost the

real estate and construction, and tourism sectors.


How do you see Brazil in 2020?

Brazil is strongly positioned but investment is needed

Source: Ernst & Young 2012 Brazil attractiveness survey.

Total respondents: 250

► Respondents believe that Brazil will take leading

positions in:

► Energy – on account of pre-salt discoveries.

► Infrastructure and tourism – as sporting events spur

growth.

► Manufacturing – as Government initiatives to boost

competiveness take effect.

Strong positioning

► Investors are concerned about Brazil’s:

► Value added services – only 5.2%

► Shared service centers – only 5.1%

► Education and higher learning – only 3.3%

Diversification required


Doing Business in Rio

Rio de Janeiro – Gateway to Brazil


Brazil has made steady and consistent progress in the last 50 years to become a country that no major company can afford not to be in

►Solid democracy

►Diversified capital-intensive industry

►Open economy status

► Solid macroeconomics (low inflation, low debt, high reserves, moderate GDP

growth, floating exchange rate, fiscal responsibility)

►Robust banking system

►Open to private investment

►More inclusive society

►Significant infrastructure investment program in place


…still, investing in Brazil requires investors to be familiar with the economic, legal and tax environments in order to succeed

►Complex tax system

►Transport and logistic infrastructure still requires major improvement

►Shortage of labor force required for complex and high end industries

►Red tape often creates delays for expansion / new investments

►Public services under perform if compared to levels at OCDE countries


Rio de Janeiro presents an opportunity for investors to enter / expand in Brazilian market avoiding many of the nation’s lingering pitfalls

►Tax breaks for major investments

►Top transport and logistics hub

►Leading education and R&D

►Agencies (such as Rio Negócios) supporting businesses to succeed

►Best-in-class, professional mind-set public services


Rio de Janeiro has a strategic plan, to be a leading city in selected sectors

►Global oil & gas hub, leveraging proximity with pre-salt basins and being the

HQ of Brazil NOC (Petrobras), major IOC, OFS and Brazil’s O&G sector

regulators)

► Latin America centre of the creative industry

►Mega-events hub (Olympics, World Cup) for the decade

►Brazil’s telecom centre

►Major Brazil centre in pharmaceutical, health care and technology & innovation


Nevertheless, going to Brazil and Rio, companies should know that “Brazil is not for Amateurs”

► Integrated logistics and tax planning can make a huge difference on

business cases Return On investment figures

► Consider higher costs and bureaucracy to have expatriates legally working

► Consider existence of some exchange controls

► Be aware of what countries have tax treaties with Brazil and those that do

not

►Some industries have specific tax regulations that , if used well, could

create tax relief – good tax planning advice is critical

What next ?

Ernst & Young Terco ► Alexandre Rangel - Exec Director

► Olympic Games Quality Review & Management Leader

+55 21 9575 9896

presentació brazil 2012 attractiveness survey

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