2012 attractiveness survey: Brazil

Capturing the momentum

  • Share

The Rio 2016 Olympics: a great source for investment opportunities

Márcio Fortes,President of Olympic Public Authority (APO)

By hosting a succession of high-profile global events over the next four years, Brazil will enhance its standing in the international arena. They are “Rio+20,” the UN world conference on sustainable development in 2012, the FIFA Confederations Cup in 2013, the FIFA World Cup a year later, and, finally, the Olympic Games 2016 in Rio de Janeiro.

Preparations for the Rio Olympics have been transforming the city since 2009, when the nomination was ratified by the International Olympic Committee (IOC).

A study conducted by the Foundation Institute of Administration (FIA) estimates that public and private investments in the games infrastructure will inject US$14.4b into the country — Rio especially — impacting in 55 different sectors of the economy.

Preparations for the games are overseen by the Olympic Public Authority (APO), a public consortium that brings together federal, state and municipal representatives whose main assignment is to monitor and deliver the infrastructure and services related to the Olympics — respecting deadlines and basic requirements from the IOC and the 41 international sports federations involved with the event.

“Since Rio’s candidature, we have aimed to demonstrate that the city has proactive management involving the three levels of government — municipal, state and federal — with major projects of urbanization, sanitation, housing and urban transportation. Regardless of the Olympics, those projects taken together show that the city is moving forward and will continue to do so,” says Márcio Fortes., President of Olympic Public Authority.
 
The number of FDI projects in Brazil increased by 39% in 2011, to a record 507.

Brazil leads the attractiveness scores in Latin America, according to our first Brazil attractiveness survey. Almost 7 out of 10 business leaders declare the country as the most attractive place to establish operations.

Our survey emphasizes the strong footprint of Brazil on the global map and its key strengths, while highlighting the need to improve skills and diversify the economy. It also includes a section on Brazil’s next phase of growth and an analysis of the key growth sectors, which we believe will drive FDI momentum in the country.

Key strengths

  • A growing middle class, strong domestic demand and huge untapped reserves of natural resources
  • Supportive government policies, simplification of licensing procedures and regulatory framework, subsidized credit and easy financing options
  • Brazil’s hosting of the 2014 FIFA World Cup and the 2016 Olympics
  • Large domestic market, long-term economic growth trajectory and wealth of natural resources
  • Openness of Brazilian society, which embraces diversity of race and religion

Challenges

  • Lack of qualified personnel and poor quality of basic education
  • High interest rates and a complicated tax system
  • Currency appreciation that burdens export competitiveness
  • Draining of resources away from other industry sectors

Foreign investment in Brazil: a record year

Brazil is the second most popular global destination in terms of FDI value and fifth in terms of FDI projects. The number of FDI projects in Brazil increased by 39% in 2011, to a record 507.

These projects created an estimated 161,166 jobs.

The US, UK, Japan, Germany and Spain accounted for 59% of the FDI projects in 2011. China is emerging as a strong partner of Brazil, with investment and trade linkages increasing between the two countries.

Global FDI inflows
(US$t)

EY - Global FDI inflows (US$t)

Source: UNCTAD.
Note: this data includes greenfield and expansion
projects and M&As.

Top sectors

Investors entered Brazil to establish factories and tap into the rapidly growing services sector in 2011.

  • While industrial activity has brought 75% of the total jobs, service activities have driven 52% of the total projects.
  • The information, communications and technology (ICT) sector generated 105 FDI projects in Brazil in 2011. The sector emerged as the fourth-largest in terms of job creation in Brazil in 2011 with 17,724 jobs.
  • Business services attracted 53 projects in 2011, constituting 10% of the total FDI projects, up by 8% in 2010.
  • Financial services attracted 35 FDI projects in 2011 (7% of the total), up from 20 projects in 2010.

Sao Paulo: the undisputed leader for FDI

The top region for FDI in Brazil is the Southeast; Sao Paulo is garnering the most attention (26% of the FDI projects). Rio de Janeiro comes second with 8% of the projects. The third destination is Curitiba with only 2% of the projects.

The Northeast region is also emerging fast on the FDI radar; it attracted 93 investment projects and created over 57,000 jobs between 2007 and 2011.

Brazil: 2013 investment plans

Of the business leaders surveyed, 60% indicated a positive outlook about setting up operations in Brazil in the near future; 33% of them highlighted firm plans for establishing activities in the country.

 Viewpoint : The Rio 2016 Olympics

 


Next >>

Content

EY - Capturing the momentum

EY's 2012 Brazil attractiveness survey video

EY - 2012 Brazil attractiveness survey video

Brazil’s rising momentum is capturing international investors’ attention. Do you want to find out why? Watch our video to learn more.

Press Release

Related Content

Contacts

  • Antonio Vita 
    South America & Brazil Advisory Managing Partner
    Tel: + 55 11 2573 3707

  • Marly Parra  
    Executive Director — Marketing Department
    Tel: + 55 11 3054 0445

  • Ines Hotte
    Media Relations Manager
    Tel: +55 11 3054 0419

  • Sandra Sasson
    Marketing and Communications Director
    Emerging Markets Center
    Tel: +30 (0)210 2886 032

  • Bijal Tanna 
    Global Media Relations
    Tel: +44 (0)20 7951 8837