Nowadays, Brazil has an open and diversified economy with wide range of possibilities for investments in different manufacturing sectors.
While the international business had the times of economic uncertainty, Brazil proved itself as a country with a stable economy, which demonstrates steady growth.
Brazil is 8,5 mln sq. km big and more than 200 million people live there.
Besides, Brazil is rich in natural resources, has leading industrial facilities and solid democratic political system.
Due to all these factors Brazil is considered to be one of the most attractive countries to invest in.
That’s why nowadays investing in Brazil is a very profitable business. Let’s try to learn more about this question.
10 reasons why you should invest in Brazil
Brazil has a leading economy in Latin American region.
This country is the second biggest developing economy in the world (after China) and the first in Latin America, which had nominal GDP of $2,4 trillion in 2012 and the average percentage growth of GDP has been 3,8% since 2002.
Brazil has a solid structure to secure reliability of investments.
The TNCs’ profit, which was determined in the region, has grown by a factor of 5.5 for the last 9 years, from $20 billion to $113 billion accordingly.
Enormous domestic market.
This country occupies the fifth place in the world by its population (200 million people) and is one of the biggest and fastest developing consumer markets in the world.
Brazilian market ranks No. 3 in the world for consuming sanitary products, number 3 for purchasing personal computers (PC), No. 4 – for buying mobile phones and TV sets, No. 5 – for buying healthcare products.
Brazil is a worldwide player.
Brazil is a member of BRICS – a group of developing economies in the XXI century.
What’s more, Brazil has the largest manufacturing enterprises in Latin America in such sectors as airspace, automobile, petroleum, gas, mining, chemical, pharmaceutical and production of manufacturing equipment.
Brazil is rich in power resources.
It occupies the 10th position in the world for the oil resources.
Here was discovered the biggest oil deposit in the Western Hemisphere for the last 30 years – pre-salt oil zone on the south-east coast of Brazil.
Moreover, this country is the biggest exporter and the second biggest manufacturer of such biofuel as ethanol.
It has the largest river system in the world and 73% of energy demand is satisfied by hydroelectricity.
Brazil is considered to be an innovative center.
Nowadays, it invests a lot in science and education.
Moreover, it attracts foreign scientists from various developed countries.
Numerous labour power in Brazil.
The great majority of population is within the range of economically active. Brazil is said to have positive tendencies in demographic increase till 2020.
The biggest infrastructure projects.
Brazil makes unprecedented investments in the infrastructure within the government Growth Acceleration Program and the Program of Investing in the
10 000 km of new railroads are planned to be built, 7500 km of roads are going to be widened and 270 regional airports are planned to be opened.
Brazil is one of the world’s leaders in the agriculture.
It is always among the leading manufacturers and exporters of sugar, biofuel ethanol, orange juice, coffee, soy, beef, poultry, pork and tobacco products.
Brazil is the window to Latin America.
The biggest cities in Brazil are believed to be not only business-centers of Brazil, but of the whole Latin American region.
Besides, it is a member of MERCUSOR (Common market of the South region) and is connected to 4 countries of South America by free trade agreements (Argentine, Venezuela, Paraguay, Uruguay).
Procedure for foreign investing in Brazil
For the last few years Brazil has started to open its economy to foreign investing.
Stabilization plan (Plan Real), National Privatization Programme, reforms in federal constitution – all these strategies, which concern economic activities, flexibility of legislative order towards the foreign capital and other actions have made Brazil able to meet competition and raised it up to the highest level in order to attract financing, which in its turn, is likely to help to get huge investments that seemed impossible few years ago.
So, foreign investing in Brazil has the following peculiarities:
- it does not require the previously arranged permission;
- the equal conditions for both national and foreign capital;
- equal capitals’ distribution and free transfer of percentages and dividends abroad.
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Which part do foreign investments play for Brazil?
Traditionally, foreign investments played a very important part in the country’s economic development that in its turn was and is the main country in the world, which attracts direct foreign investments.
Main directions and priorities of investing in Brazil
The investment policy of Brazilian government is focused on the increase of national investing expanses and on stimulating private investing (national and foreign).
The main flow of national investments goes to the infrastructural and logistics projects.
Forms of government regulations of investing in Brazil
Government regulation of investing activities in this country is carried out in the following ways:
- development of tax system, charging of depreciation and using amortization expenses;
- granting government guarantees on the investing projects out of the funds of the federal budget;
- distribution on the competitive basis of the money from the federal budget and of the money from state budget to finance investing projects;
- investors’ interest protection;
- granting concessions to national and foreign investors according to the results of the bidding.
- fulfillment of regional investing programs;
- releasing funded loans;
- defining the spheres of activities, in which foreign capital is banned to take part; examination of the investing projects.
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Spheres, where you can invest in Brazil
Judging by the official version of foreign investments, they are attracted to Brazil to create new working places for the local tenants.
Generally, these are the unstable branches of economy with high risks and those, which greatly depend on the world’ financial stagger.
For example, tourist industry in Brazil.
Many hotels and other tourist infrastructure are owned by the foreigners.
Most of these foreign investing in the sphere of tourism accounts for Argentinians.
These investments were made pending on the huge tourist demand from Argentine to Brazil.
Then follow French and British investors.
In general, they put their money to Brazilian hotels, restaurants, different clubs and small cottages (pousadas).
Moreover, they invest in plenty of various real estates, which is required for tourist goals.
Most foreign investments came to the tourist sector in Brazil, when the dollar’s exchange was equal to three Brazilian Reals.
After Brazilian Real had been significantly strengthened for the last four years, the flow of foreign tourists decreased a lot, or at least changed its quality, which led to reductions of profit and even losses.
That’s why many objects of tourist infrastructure in Brazil are on sale now.
However, tourism is one of the most promising branches to invest in Brazil.
Though, this perspective seems too remote due to the current treatment from the floppy Brazilian democratic machine.
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You should also take into account the risks connected to the delivery of tourist and food services to the population.
From the investments’ point of view, investing in such business requires systematic control and great deal of personal attention to this project.
If you have no possibility to take part in it personally, you’ll probably lose your investments and, besides, you might even have various legal wrangles.
If you invest in manufacturing in Brazil, you risk much less, but it is sure to take you more time to have the first income.
It’s connected to the rather limited inside consumer market, where the most of population live worse than poor people and buy goods only of the first necessity.
Surely, it’s better if the manufacturing is directed to the export. In this case, you may even have preferences from the Brazilian government.
Risks of investing in Brazil
Very high level of bureaucratization within the Brazilian society with all following consequences.
Huge lack of qualified and responsible workers.
Some people explain it by the Brazilian mentality, but it’s wrong.
Surely, it’s the lack of preparation and low level of development (Brazilians play football very well and also they excellently dance on the carnivals, because there is a great network of schools and centers, which prepare professionals in these fields).
Extreme deliberation and excess legal obstacles in Brazilian proceedings.
It should be noted that court in Brazil, one may say, is fair and independent (surely, depending on what country you compare it with).
Various legal wrangling can last more than three years.
Another great obstacle for foreign investors in the investment sphere is the language barrier.
It’s a huge risk to trust to the interpreters in the sphere of investing.
However, it’s quite possible to deal with the rest of obstacles.
Investing in Brazil provides with plenty of opportunities for growing your capital.
It’s significantly important to choose the one and only sphere, to have detailed economical calculations and to get familiar with the legislative framework of this country.