Alexandre Petry is the head of the Investment unit at Apex-Brazil, the Brazilian Trade and Investment promotion agency helping both Brazilian and foreign companies to invest in the Latin-American country. He spoke to EurActiv's Daniela Vincenti.
How would you describe current EU-Brazil economic and investment relations?
The European Union and European countries have been frequent investors in Brazil for the past 10-20-30 years. The EU is the third biggest investor to Brazil and I believe this will continue in the upcoming years. There is a tradition of EU companies to invest in Brazil.
There are some companies in sectors like the oil and gas industry, renewable energy, telecommunications, banking services and automotive industry that will continue investing there in the future.
And this despite the fact that Brazil is not growing at the moment and is facing a sluggish economy?
Even though our economy is not growing, true, there are some niches and some sectors are growing at a faster pace than the whole economy. I believe that there are some specific segments that companies can benefit from.
In the infrastructure and logistics sector, the government has finally launched a concessions programme, including airport, ports, railway, roads. This will require a lot of investment. Brazil has created an institution called Brazilian Logistic Planning, whereby they expect the next five years they would $235 billion in investment to run all those concession programmes. There are new opportunities opening up in Brazil.
Brazil is opening up access to public procurement?
In a way. Construction companies from Europe, specialised in airport management that are operating in Amsterdam or elsewhere. Not just public procurement, but also service providers, as well.
What do you consider to be the most immediate obstacles to foreign investment in Brazil?
The biggest obstacles are related to our investment climate as a whole, not only foreign investment but also Brazilian companies investing in Brazil. One obstacle is the taxation framework, which is quite complex. Another one is labour costs and availability. Our unemployment rate is very low, so we have a shortage of skilled people, like engineers.
Cost of utilities is high in Brazil. These are the bottlenecks that prevent investment. Brazil has to solve the problems in order to foster investment.
Is it taking the right decisions to solve its problems?
The government has been taking some measures to improve the situation. For example, solving the infrastructure problems through the concession programme is one of the measure. Last year, the government decided to reduce the cost of electricity, which was one of the highest in the world.
In the case of skill shortages, the government has started a programme to send Brazilian to study abroad and seek masters’ degrees. We also have a new incentive programme in the form of temporary working permit to attract foreigners – highly skilled professionals - to Brazil.
Rightly so. Many young Europeans - Portuguese and Spanish - facing high unemployment rates and unattractive job markets in their home countries are flocking to Brazil. In your opinion, is the EU in danger of losing its leading share in foreign investments in Brazil to other partners, namely in Asia and the Americas - other BRICS countries?
So far we have not seen much investment coming from other countries. Europe and the United States have the highest investment in Brazil. So, we don’t see much investment coming from the other BRICS, except China. Now Russia is starting to invest in oil and gas, but it’s a niche investment.
I don’t see in the near future any change of direction, because the investment coming from Europe is spread across sectors. While the one coming from China are mostly investing in commodity-oriented segments. Now they are starting to move into the automotive sector.
But it is still very limited to some sectors for the time being.
Chinese have been quite aggressive in building infrastructure, in Africa for example. Do you have the feeling that they will turn to Brazil now that you have this new concessions programme opening up to foreign companies?
We had concessions bidding round for the exploration of oil and gas last month. And most of the proposals came from US, Europe and Brazil. Although Chinese companies were qualified to make proposals they haven’t.
I am not sure they have the same type of appetite for Brazilian opportunities, as they have their eyes on Africa.
Should EU and Brazil go for a bilateral investment agreement, considering the deadlock in Mercosur?
We are not involved in the negotiations. It is hard for me to tell you.
But would you be in favour for such a bilateral investment agreement?
We would surely see it with positive eyes. In general terms, commercial treaties are good for business.
How do you view the TTIP and these other regional agreements in the making. What impact on Brazil?
Brazil is surely be concerned by such a deal as it will increase trade and investment between the two parties at a disadvantage of Brazil. We would have to see how it will develop.