Business Climate in Brazil

Business Climate in Brazil

Centro do Rio de Janeiro

Brazil is the world’s seventh largest economy in terms of Gross Domestic Product (GDP) and the fourth largest democracy by population but  it is ranked only 95th in the world for gross national income per capita. But doing business in Brazil requires intimate knowledge of the local environment. The Brazilian economy is large and diverse by almost any standard. 

The Global Competitiveness Index rank Brazil on place 57 on a ranking scale out of 144  for the period of 2014-2015.  Brazil scores well in domestic market size index and the financial market development like the regulation of securities exchanges. Brazil has undergone several programs of privatization of state-owned companies, with the biggest taking place when the state-owned telecommunication companies were sold in 1998.

Commodities
Prices of Brazilian commodities such as oil, iron ore and soya have slumped: a Brazilian commodities index compiled by Credit Suisse, a bank, has fallen by 41% since its peak in 2011.

Rio de Janeiro and petroleum
Brazil is rich in natural resources and has some of the largest iron ore deposits in the world. Rio de Janeiro is centre for the growing oil and petroleum industry. Brazil is self-sufficient in oil and more and more oil fields are being discovered.  Unfortunately there is the Petrobras affair called The petrolão (“big oily”) in Brazil.

Brazil is an emerging power with world-class ambitions

Today Brazil has undergone a complete reversal of fortune.
In 2014 The Brazilian Trade and Investment Promotion Agency sponsored “Be Brasil” in New York, a fair celebrating
Brazilian technology, music, fashion, art, cuisine and more.

But one problem is that Brazil is relying on exports of raw primary goods rather than moving up the value chain with exports of more sophisticated products.

  • Very rich biodiversity.
  • Abundant agricultural, mineral and energy
    potential.
  •  Enormous internal growth potential.
  • Broad industrial base and infrastructure and a
    diversified economy.
  • Fast-changing business conditions.
  •  Social inequality.
  • Extensive bureaucracy

The most problematic factors for doing business in Brazil according to World Economic Forum

  • Tax regulations 19.3
  • Tax rates 17.7
  • Inadequate supply of infrastructure 13.8
  • Restrictive labor regulations 12.9
  • Inefficient government bureaucracy 11.3
  • Corruption 6.9
  • Access to financing 5.6
  • Inadequately educated workforce 5.1
  • Crime and theft 2.2
  • Foreign currency regulations 1.7
  • Policy instability 1.7
  • Poor public health 0.8
  • Inflation 0.5
  • Poor work ethic in national labor force 0.5
  • Government instability/coups 0.2
  • From a list of 15 factors, respondents were asked to select the five most problematic for doing business in their country and to rank them between1 (most problematic) and 5.

The principal source of Brazilian civil law is the Civil Code and subsequent legislation. The legal system is slow and cumbersome

Brazilian banks

A pressrelease 8th of June 2011 from Independent Credit View gives thumbs up for Brazilian banks.With a substantial capital surplus the Brazilian banks Banco do Brasil and Bradesco are on top of the leader board ahead of UBS. You also have Caixa (caixa economica federal), Itau Unibanco which is Latin Americas largest bank.

BNDES (The Brazilian Development Bank) carry out national economic development policies.  BTG Puctual is Latin America’s largest standalone investment bank.

More information about doing business in Brazil

Sources: The Global Competitiveness Report 2010-2011 from World Economic Forum
Download report from World Economic Forum
D
ownload report “Doing business and investing in Brazil” from PWC