Foreign Investment In Brazil

INTRODUCTION

“For those who believed that Brazil would forever be the country of the future, I have a piece of bad news. The future has finally arrived.” For years, the largest and most industrialized nation in Latin America has been known as the country of tomorrow. That slogan may soon be out of date. Under the guidance of former finance minister and current president, Fernando Henrique Cardoso, this tenth largest economy in the world, once known for its high tariffs and even higher inflation, has entered a period of steady growth, the fruit of a newly-stable political and commercial environment. In combination with the upturn in its economy, Brazil’s demonstrated preference for foreign products and strong direct investment presence bode well for expanded sales of equipment and services in future years.
EMERGING SECTORS
Access to Brazilian markets in most sectors is generally favorable, and competition and participation characterize most markets by foreign firms through imports, local production and joint ventures. Many sectors such as healthcare, the environment, transportation, telecommunications and financial services, have been growing at a phenomenal rate and opportunities to further expand trade and investment are highly encouraged.
Healthcare Technology
Brazil is an excellent market for U.S. manufacturers of health technology products and services. In the medical device sector, the products that should have the best long-term prospects in Brazil are medical imagining equipment, electro-diagnostic apparatus and technologically advanced disposable medical products. In the pharmaceutical sector, long-term prospects for over-the-counter drugs and vitamins are excellent because of the high cost of private medical assistance and a growing trend towards home treatment. In the healthcare services sector, the best market opportunities include the following areas:
 hospital management and consulting services
 training for allied health-care personnel
 hospital renovation
 health maintenance organizations

In order to provide more efficient health care, the Brazilian government has begun to reform the country’s entire medical care delivery system. It has decentralized the system, giving more autonomy to the states and cities in the planning and controlling of local health care programs. Overall, improvements in Brazils public healthcare sector, coupled with its trade liberalization measures, should improve the prospects for U.S. technology firms in the Brazilian market.
Environmental Technology
The Brazilian market for environmental technology had an estimated value of over $1 billion in 1994. However, the National Department of Sanitation and Environmental Equipment estimates that the total investments needed to equip Brazil with necessary pollution control supplies and services amounts to over $19 billion.
The Brazilian market-size, alone, makes it worth consideration: its population is the largest in Latin America. Additionally, Brazil’s diversified industrial and agricultural base has proved a ready market for a wide array of environmental goods and services. Also significant are recent and anticipated moves towards trade liberalization. Brazilian tariffs affecting pollution control equipment have been lowered from 25 to 20 percent while non-tariff barriers such as quotas and voluntary export restraints have, in a large part, been eliminated. Finally, a growing environmental awareness, including stricter fines for non-compliance with environmental standards, is catalyzing demand for foreign environmental goods and services.
Transportation
Brazil is the tenth largest car producer in the world. Brazil’s success in automobile sales is due to a government decree which virtually eliminated the federal industrial products tax on small “popular models” such as the GM Corsa, Volkswagon Golf and Fiat Uno. The decree includes commitments by the automakers to pass on the entire tax reduction to consumers and to expand production and employment. These incentives apply only to specific locally assembled vehicles meeting strict local content requirements.
Another aspect of the automotive industry is auto parts. Brazil’s current market-opening policy is to promote the sector in order to boost investment in manufacturing processes, training and research. However, trade sources have reported that some manufacturers are unable to invest and therefore achieve the necessary international quality and price standards. Thus, motor vehicle manufacturers are expected to increase purchases of automotive parts manufactured abroad. This condition represents a huge long-term trade opportunity for American automotive parts suppliers. The amount of imported U.S. equipment is expected to increase an average of ten percent per year during the next few years because of lower transportation costs (in comparison to Europe and Asia) and the relatively high acceptance level that American automotive parts