New Brazil government hungry for infrastructure investment

The Brazilian government wants to ramp up its concession process for ports like Suape, pictured.

 

 

A new market friendly government in Brazil is keen to get U.S. investment for ports, roads, airports and railroads that would eventually reduce costs for shippers in both countries.

After several failed privatization bids this year for port grain terminals in the Amazonas and Pará regions (mostly in the port of Belém), Brasilia is desperate to find new international investors, particularly with tenders set for more than 30 port terminals worth more than 10 billion reais ($3.1 billion), including box facilities in Santos, South America’s largest port, and Suape.

On top of this, the Confederação Nacional da Indústria, or CNI, a powerful shippers group in Brazil that represents the federations of industry in 26 states, wants the country to cut bureaucratic red tape to help its members export more goods around the world, and especially to the U.S.

The CNI recently sent a letter to the Minister of Foreign Affairs José Serra, and Industry, Trade and Service Minister Marcos Pereira saying that bureaucratic barriers impact Brazilian exports and investment and discourage newcomers from entering the export market.

“One of the things we will need to do is reduce Brazilian red tape,” said Cassia Carvalho, the executive director of the Brazil-U.S. Business Council. “We want to help encourage Brazil to simplify its tax administration and we also want to help with Brazilian plans to invest heavily in infrastructure projects. We want to work with the Brazilian government to renew its PPP (public-private partnership) model and there are big investors and equity funds who are interested in this.”

It is also important to push for a comprehensive trade agreement between the U.S. and Brazil in order to realize the full potential of bilateral trade between the two largest economies in the Western Hemisphere, Carvalho said.

The council includes major freight forwarders such as DHL, FedEx and UPS.

The CNI wants to work closely with the council to help cut red tape and attract more port and infrastructure investment to Brazil, said CNI’s Industrial Development Director Carlos Abijaodi.

“With the downturn in the Brazilian domestic market, we need a stronger international trade policy,” said Abijaodi. “We also need to work so that the country has a comfortable environment that will attract local investment and help us out of recession.”

Brazil is the largest economy in Latin America and the seventh-largest in the world. U.S.-Brazil trade totaled $72.4 billion in 2014, according to the U.S. Census Bureau, with exports to Brazil valued at $42.4 billion and imports from Brazil at $30 billion. That figure fell to $59.1 billion in 2015 with exports to the U.S. amounting to $31.65 billion, and imports from Brazil totaling $27.5 billion.

U.S. exports to Brazil comprise mostly of chemicals, petroleum, transportation equipment and machinery, and Brazil exports mostly semi-manufactured products.

Containerized trade between the two countries in 2015 totaled 572,551 twenty-foot-equivalent units, with exports from the U.S. down to 256,996 TEUs, a drop of 14.7 percent year-over-year, and imports from Brazil rising to 315,551 TEUs, up 8.8 percent, according to PIERS, a sister product of JOC.com within IHS.

Contact Rob Ward at rcward788@btinternet.com.