News from Brazil

Brazil Business & Economy News

In Brazil on August 5, 2011 at 9:23 am

ECONOMY

Brazil’s President Dilma Rousseff has unveiled plans to help her country be more competitive. The measures include tax breaks for Brazilian-made products and anti-dumping measures on cheaper imports mostly from China (BBC).

A tax cut is the centrepiece of President Dilma Rousseff’s long-awaited industrial policy, announced on August 2nd. It also includes a promise to act more quickly where imports involve dumping, and stricter checks on the origins of goods (Chinese manufacturers are rumoured to be evading anti-dumping tariffs by shipping via third countries). A “Buy Brazil” policy will bend public-procurement rules to allow the government to pay up to a quarter more than the lowest price in order to secure a local supplier (The Economist).

The BNDES approved a series of support measures for the Brazilian production sector, enabling swifter concession of financing and reduced investment costs. These steps are part of the Brasil Maior Plan, disclosed in Brasília by the President of the Republic, Dilma Rousseff. Programs include support for sectors impacted by the exchange rate, a boost in financing for innovation, working capital and professional qualification (BNDES).

Brazil’s strong currency (the so-called Super Real) is here to stay, and businesses have to get used to this new environment, said Trade and Industry Minister Fernando Pimentel a day after the government announced a massive industry support program which was described is the equivalent of the US “Buy America Act” (MercoPress).

Brazil’s two biggest cities, Rio and São Paulo, have been ranked amongst the top fifteen most expensive cities in the world for expats, according to Mercer’s Worldwide Cost of Living Survey published last month. The report has Luanda, Angola as the world’s most expensive city for expatriates in the second year in a row, and for the Americas, São Paulo and Rio de Janeiro, Brazil top the list (The Rio Times).

Brazil’s trade surplus more than doubled in July from a year ago fuelled by higher commodity prices in spite of the over-valued Super Real that is having an impact on manufactured goods exports and promotes the import of ‘cheap’ products (MercoPress).

For decades, the joke about Brazil has been that it’s the country of the future — and always will be. Despite enormous natural resources, it has long displayed an uncanny ability to squander its vast potential. Now it’s beginning to look like Brazil might have the last laugh. While most of the world is consumed with debt and unemployment, Brazil is trying to figure out how to manage an economic boom. It was the last country to enter the Great Recession, the first to leave it, and is now poised to overtake France and Britain as the world’s fifth largest economy (CBS).

BUSINESS

Japanese beermaker Kirin has bought a majority stake in a family-run Brazilian brewer. Kirin took the stake in the company that owns Schincariol for 198.8bn yen ($2.56bn; £1.6bn) as it looks for growth overseas (BBC).

A family feud could put at risk the $2.6 billion takeover of Schincariol, Brazil’s second-largest brewer, by Japan’s Kirin Holdings Co, according to a newspaper report (Reuters).

Chinese carmaker JAC Motors will build a factory in Brazil to boost its presence in Latin America’s biggest car market. Jianghuai Automobile, also known as JAC, plans to have the capacity to produce 100,000 vehicles annually (BBC).

Brazil is forecasted to become the world’s third largest automobile manufacturer. The country’s car production capacity is expected to jump from the current 3.6 million units per year to 6.2 million by 2025 supported by massive investments from the industry estimated in 19 billion dollars by 2017, according to estimated from the Vanzolini Foundation in Sao Paulo (MercoPress).

Eike Batista may no longer be the world’s eighth-richest man after losing some $2 billion in a market rout that saw his companies lead losses on Latin America’s largest stock exchange. The flamboyant billionaire’s more than two-thirds stake in the EBX group — an oil, gas, mining and transportation conglomerate with a market capitalization of $31 billion but almost no revenue — lost about 9 percent of its value (Reuters).

Odebrecht SA, a Brazilian engineering and construction company, plans to bid in at least one of the planned airport expansions in Sao Paulo, Rio de Janeiro and Brasilia ahead of the 2014 World Cup in Brazil, said Marcelo Odebrecht, the company’s president (Bloomberg).

At Brazilian real-estate company MRV Engenharia & Participacoes SA, electric fans whir in some rooms of its gray, low-slung building, saving the cost of air conditioning. That’s typical of Rubens Menin Teixeira de Souza’s approach to the business he founded in 1979 — and which has since vaulted him into the ranks of the world’s billionaires, with an estimated net worth of at least $1.6 billion, Bloomberg Markets magazine reports in its September cover package: “Hidden Billionaires” (Bloomberg).

AGRI ETC

Although not yet a trend, it can be described as an impressive early step with more to come. A joint-venture between U.S. multinational Dow Chemical and Japan’s Mitsui, announced in Brazil, will result in the construction of a new sugarcane processing unit dedicated to manufacturing bioplastics and biopolymers (Unica).

The area in Brazil planted with transgenic seeds is now growing at a faster pace than the growth of the entire planted area for crops of soybeans, corn and cotton – the three crops with genetically modified varieties that have been approved, as indicated by the 1st review of the adoption of biotechnology in the 2011/12 harvest, conducted by the consulting firm Celeres (Newswire).

The Brazilian government’s recent measure imposing a tax on currency derivatives contracts will hurt the country’s grain export sector, grain crushing industry Abiove said (Reuters).

A quiet industrial revolution is unfolding in the coffee fields of Brazil, where a diminishing supply of seasonal workers is forcing farmers to opt for machines they’ve long eschewed: mechanical harvesters (Reuters).

AVIATION

The National Institute of Technology (INT) and the Military Engineering Institute (IME) have filed international patent applications for the two unprecedented processes developed jointly to make aviation bio-kerosene. Unlike other ethanol-based studies, these processes use citrus peel waste and eucalyptus biomass (Portal Brasil).

France’s pilots union suspended its cooperation with an inquiry into the 2009 crash of an Air France flight in protest at what it said was the authorities’ decision to ignore problems with the plane’s stall alarm and emphasise instead pilot errors (Reuters).

BANKING & FINANCE

Investors fled high-risk assets worldwide, but they ran screaming from Brazilian equities. The country’s Bovespa stock index dropped as much as 6 per cent in early afternoon trade to a two-year low – the worst performance among the world’s main equity indices tracked by Bloomberg (FT Beyond BRICS).

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OIL & GAS

Petrobras expects within two years to sell $13.6 billion in assets that may include stakes in the offshore Campos Basin (Reuters).

PORTS

Royal Boskalis Westminster N.V. (Boskalis) of Rotterdam has won a contract for the construction of a new port terminal TX2 at Superporto do Açu. The Açu Superport industrial complex in the north of Rio de Janeiro state is the largest port-industry enterprise in Latin America and is expected to become one of the largest port complexes in the world.  The contract, worth approximately € 200 million, was awarded to Boskalis by LLX Açu Operações Portuárias S.A. and Construção Naval S.A., controlled respectively by LLX LogísticaS.A. and OSX Brasil S.A.. Both companies belong to the EBX group owned by Brazilian entrepreneur Eike Batista (Boskalis).

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