BRAZIL FACT SHEET. May Brazil. Fact Sheet. Brazilian Agency for Industrial Development (ABDI) Page 1

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1 Brazil Fact Sheet Brazilian Agency for Industrial Development (ABDI) Page 1

2 Economy & Society Brazil is the leading economy in Latin America, with a GDP of US$ billion; The 8 th economy worldwide; GDP increased by 5.7% in 2007 and 5.1% in 2008; The main destination for FDI in Latin America; The fourth favorite estimate destination of FDI in the world ( ), after China, USA and India; In 2008, FDI inflow reached US$ 45 billion in Brazil; An increase of 30%, contrasted by a global decrease of 15% in that year; The FDI in March 2010 was US$ 2 billion; Brazil presents the highest rates of economic internationalization among the BRIC countries, considering the supply of FDI in relation to the GDP, 18% (Russia: 13%, China: 9%); FDI outflows amounted US$20 billion in Brazil, an increase of 189% in 2008; Jobs in the public sector represent 10.7% of total employment (US: 15%); Between 2003 and 2009 there was a drop of 4.2% points in the unemployment rates; BNDES disbursement in 2007: US$ 34 billion (World Bank: US$ 11 billion); BNDES disbursement in 2008: US$ 49 billion; in 2009: US$71 billion; US$ 526 billion invested from 2011 to 2014 on transport, energy and social development, under the Growth Acceleration Program (PAC); Increase of 22% on the BNDES investments in 12 months; Brazilian exports increased more than 260% from 2000 to 2008; Trade surplus 2009 was US$ 25.3 billion. Business & entrepreneurship National strategies for simplification of foreign trade and for the improvement of legal environment are favoring the business community, increasing the security of the productive sector and stimulating innovation and competitiveness; The Brazilian Innovation Law was enacted in 2005 i ; Over 150 (80 fully operational) technology transfer offices were created since then; SMEs are now granted fast track treatment ii ; The National Network for the Simplification of Companies and Businesses Registration REDESIM was established in 2007; 20 thousand institutions have been engaged with REDESIM ever since; Opening a company can take as short as 2 days, depending on the city; The Innovate Project by Finep will invest US$ 180 million of venture capital, private equity and seed capital from 2008 to 2010 in over 25 funds in order to foster SMEs cycle of innovation from research to the market. The number of trademarks awarded by INPI increased 7 fold from 2006 to 2008; Page 2

3 The National Council Against Piracy (CNCP) launched in August 2009 an extended national plan to fight piracy in the country; The capital committed in VC funds in Brazil increased by more than 55% per year in the last five years; Since 2010, public companies and financial institutions are adopting the IFRS; Exponential growth of Brazilian companies in more advanced levels of corporate governance; Brazil is ranked second in information to foreign investors in the World Bank s Global Investment Promotion Benchmarking Market The largest consumer market in Latin America; World s 5 th market for automobiles, personal computers, books and music; World s 4 th market for refrigerators; World s 3 rd market for cell phones, cosmetics, copying machines, TV sets & soft drinks; World s 2 nd market for executive jets; Leader in the production of airplanes boarding up to 120 passengers and 4 th largest world manufacturer of airplanes in general; Internet sales grew 30% in 2009 in comparison with 2008; Sales for some consumer electronics and home appliances increased by 60% in rural areas recently connected to the power grid ( Electric Power for Everyone Program - 10 million people serviced); Sales of furniture and electrical household appliances increased by 22% in February 2010 in comparison with the same period in 2009; Middle class substantially expanded. In 2009, class C accounted for 53.6% of the population, up from 32% in Energy Brazil is the world leader in sources and usage of renewable energy; World s largest producer of sugarcane and second in bioethanol (U.S. 1 st ); World s largest exporter of bioethanol (2.28 billion of liters until August, 2009); World s 3 rd market for biodiesel; Only country in the world that extensively uses an alternative fuel to gasoline; Brazil ranks 1st in the percentage of bioethanol used on transportation fuel : 50%, in contrast to 7% in the US; 2% in China and 1% in Europe; BNDES is the world s largest financer of renewables: in 2008, it disbursed US$ 3.8 billion for renewable energy (in 2000, it disbursed US$ 8 million); Since 1981, about 800 million tons of CO2 emissions were avoided thanks to ethanol usage in the Brazilian energy mix; Renewables account for 47% of Brazil s energy sources (world average: 12.7%); Page 3

4 Hydroelectric power plants produce 77% of the electrical energy supply; The electric power grid is fully integrated over the country; A single regulatory agency (ANEEL) oversees the electric system in the whole country; The power grid is centrally managed by an independent system operator (ONS); 160 hydroelectric power plants operate in Brazil; 59 new hydroelectric power plants (28,600 MW capacity) are planned for construction; Brazil has the world record for deep water and ultra-deep oil production; Brazil is self-sufficient in oil production since 2007; Petrobras will invest between US$ 200 billion and US$ 220 billion from 2010 to 2014 in production, refineries and pipelines; Petrobras is doubling the facilities of its R&D center (Cenpes) in Rio de Janeiro. Science, technology and education Brazilian universities award 10,000 Ph.D. and 30,000 Master degrees a year; 60,000 new graduates a year in Engineering (Electrical, Mechanical, Chemical and Industrial), Computer Sciences, Telecommunications, Physics, Chemistry, Information Systems and Industrial Design; 25,000 new professionals are trained in IT each year; 18 million people with university-level degrees in technical-scientific occupations; Brazil ranks 17 th in the world ranking of relevant scientific production; 25 technology parks in operation, 49 being implemented; Over 400 incubators involving over 6000 innovative businesses; 2,800 incubated firms and 1,500 graduated firms; In 2008, Brazil invested 1.13% of the country s GDP on R&D; Brazil expects to invest 1.5% of its GDP in R&D by 2010; A national network for technological services is being implemented (SISBRATEC); A new national program (PRIME) fostered the creation of 2000 start-up companies; Since 2008, BNDES has increased its investments in innovation by 45%. IT & Society Brazil Is the world leader in internet banking and e-government; All checks issued in Brazil are cleared within 24 or 48 hours; All bank transfers over US$ 2,500 are done in real time in the whole Country; Since 2000, 100% of polling stations use electronic ballots; Final results for elections are available 10 hours after polling stations closure; Over 99% of all income tax declarations are filled on-line; 89% of Brazilian enterprises with 10 or more employees use electronic e-gov services; 31.5% of Brazilian households have computers (24% are connected to the Internet); Page 4

5 The number of internet users increased over 270% in the last 5 years, representing over 53 million users; Internet sales reached US$ 5.28 billion in 2009 (market exchange rate), a 30% increase compared to the previous year. Financial crisis in Brazil The Brazilian economy is being affected on a much limited extent than other countries; Effects are being softened by the favorable economic conditions Brazil enjoyed before the crisis; Automobiles sales went up by 11.35% in 2009, in relation to 2008; Bovespa, Latin America s largest stock exchange, had 2008 s largest value rise (70%), showing the Brazilian market had the quickest reaction; The growth forecast of Brazilian GDP for 2010 is 5%; As of June 2009, income and total salaries grew 4.3% during crisis (variation accrued along 12 months); Since January 2009, the number of people hired is larger than that of people fired; In February 2010, a total of 209,000 new jobs were created; International reserves are increasing and reached US$ 241 billion in February 2010; In September 2009, US$ billion in foreign applications were invested in stock options negotiated in Brazil; However, in October 2009 (until the 23th), this amount reached US$ billion the largest in any month ever since Social aspects Full democracy, with no ethnic or religious conflicts; Poverty level was reduced from 42.7% (2003) to 28.8% (2008); Extreme poverty was reduced from 25.6% (1990) to 4.8% (2008); 5 th largest labor force in the world; Average income of employed person grew 11.3% from 2003 to 2008; Between 2002 and 2007 the income was increased: o For the poorest 10% +22.2%; o For the richest 10% 0.3%. Between 2003 and 2008, 19.3 million Brazilian improved their income and left the E class; 6.1 million migrated to A and B classes and 25.7 million to class C; The A, B and C classes altogether now represent almost 70% of the Brazilian population; Since 2003, more than 12 million job positions were created in Brazil; Construction and sale of 400,000 housing units in the triennium. US$ billion invested from 2011 to 2014 in the construction of 2 million houses to low income families, under the program My House, My Life. Page 5

6 General figures 50% of South America s population: the world s fifth-most populous country, with 198,739,270 inhabitants (2009 estimate); projected population in 2025: 231,886,946 (2009 estimate); 50% of South America s surface: 8,514,877 square Km; World s largest biodiversity; 20% from the world s total of species and 12% of the world s fresh water; The world's eighth-largest economy in GDP terms: US$ billion in 2009; 67 airports that transported million passengers and 1.2 million tons of cargo in 2008; 31,000 Km of railways (10 th in the world in extension); 1.7 million km of roads (3 th in the world in extension); Ports: 40 public and 45 private ports that transported million tons of cargo in 2007 (a 68% increase from 2000); US$ 313 billion in public and private investments in roads, railroads and ports, until Page 6

7 Glossary ANEEL Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica) APEX Brazilian Trade and Investment Promotion Agency (Agência Brasileira de Promoção de Exportações e Investimentos) BCB Brazilian Central Bank (Banco Central do Brasil) BNDES National Development Bank (Banco Nacional de Desenvolvimento Econômico e Social) CAPES Coordination Coordination of Improvement of Higher Education (Coordenação de Aperfeiçoamento de Pessoal de Nível Superior) CENPES Petrobrás Research Center (Centro de Pesquisas da Petrobrás) CNPq - National Counsel of Technological and Scientific Development (Conselho Nacional de Desenvolvimento Científico e Tecnológico) FAPs Foundation for Research Support (Fundação de Apoio à Pesquisa) FINEP Financier of Studies and Projects (Financiadora de Estudos e Projetos) FNDCT National Fund for Scientific and Technological Development (Fundo Nacional para Desenvolvimento Científico e Tecnológico) IFRS - International Financial Reporting Standards INPI National Institute of Industrial Property (Instituto Nacional da Propriedade Industrial) MCT Ministry of Science and Technology (Ministério da Ciência e Tecnologia) MS Ministry of Health (Ministério da Saúde) ONS National Operator of the Electric System (Operador Nacional do Sistema Elétrico) PRIME First Innovative Enterprise (Primeira Empresa Inovadora) REDESIM National Network for the Simplification of Companies and Businesses Registration (Rede Nacional para a Simplificação do Registro e da Legalização de Empresas e Negócios) SIBRATEC Brazilian Technology System (Sistema Brasileiro de Tecnologia) Sources: ANEEL, ANPROTEC (The Brazilian Association of Science Parks and Business Incubators), APEX, BCB Brazilian Central Bank, Caderno Destaques da Indústria, GVcepe, MME (Ministry of Mines and Energy), Ministry of Justice, FGV-RJ (Getúlio Vargas Foundation Rio de Janeiro), GVcepe (Getúlio Vargas Foundation Research Center on Venture Capital and Private Equity), Sobeet (Brazilian Society for the Research of Transnational Companies and Economic Globalization), Unctad (United Nations Conference on Trade and Development), Softex (Association for Promoting the Brazilian Software Excellence), Valor Econômico newspaper. i The Brazilian Innovation Law ( Lei da Inovação, /2004) establishes measures to promote innovation and scientific and technological research in the productive environment, aimed at reaching technological autonomy and industrial development. Drafted with contributions from the private sector and universities, the law improves the communication between these two sectors. The law allows private companies to fund public institutions to carry out research on their behalf, while university researchers can be compensated for their work on these privately funded partnerships. The law also encourages the public and private sectors to share staff, funding and facilities such as laboratories. ii This special treatment covers credit access, tax exemption and the simplification of procedures for company registration, public procurement, technological innovation and access to courts. Page 7