2. POLITICS
• Rely on monetary policy
• Cut interest rate from 12% in August 2011 to
current 10.5% (expect to reduce further)
• Inflationary present real value of capital
reduces
• Detrimental to consumers and therefore
demand for firm’s products
• Negative short term outlook for start-up
• By Aliomar Galvao
3. POLITICS
• Due to:
- Shortages in food supply, increasing domestic
demand, and increases in produces prices are greatly
impacting inflation;
- - But with lower GDP growth, inflation rate is
expected to reduce to 4.32%
- Important to note: with domestic consumption
increasing and oil prices likely to be raised in the
future, inflation will remain a challenge.
• By Aliomar Galvao
4. POLITICS
• Growth Acceleration Programme
- USD 240 bn investment plan;
- Focuses on energy, logistics, social and urban projects;
- Many infrastructures under current construction are
to facilitate the hosting of 2014 World Cup and 2016
Olympic Games
- Mind and long Term: improve the business
environment of the country ; ex, the efficiency of
transport; potentially attract even more foreign
investors.
• By Aliomar Galvao
5. POLITICS
• Corruption
- Widespread corruption: when business are seeking
government contract, and also occurring when
business must deal with government regulatory bodies;
- Lack of availability for government contracts turn away
new entrepreneurs representing a barrier to entry;
- New entrants may be forced to commit bribery to
obtain contracts.
• By Aliomar Galvao
6. ECONOMICS
• Current state of the economy:
- GDP USD 2,52 tn (2011)
- Exports in 2012 totalled USD 201,9 bn
- Main exports: manufactured goods, iron ore, coffee,
orange and other agricultural produce
- It’s main export partners are China, US and Argentina
- Imports in 2010 of USD 181,6 bn
- Government forecast growth of 3.5% in 2011,
compared with 7.5% in 2010.
• By Aliomar Galvao
7. ECONOMICS
• FDI Ranking – Foreign Direct Investment
• Ranking give below is based a country’s economic
stability, economic risk, business and investment
climate:
Country Score FDI Amount
Brazil 8 2009 USD 25.95 bn
Malaysia 8.5 2010 USD
48.5 bn
Germany 9 – 9.5 2011 USD 55 bn
United Kingdom 9
USA 9 – 9.5 • By Aliomar Galvao
8. ECONOMICS
• Composed of the Economy
• Services 64%
• Agriculture 8%
• Industry 28%
• By Aliomar Galvao
9. ECONOMICS
• Current Credit Rating
“We expect the government to pursue caution
fiscal and monetary policies that, combined
with the country is growing economic
resilience, should moderate the impact of
potential external shocks and sustain long-
term growth prospects.”
Standard & Poors
• By Aliomar Galvao
10. SOCIAL Issues
• Increasing proportion of middle class will
increase consumer demand:
High Class 11%
Formal middle class 17%
Informal middle class 50%
Lower class 22%
• By Aliomar Galvao
11. SOCIAL Issues
• Education, current situation:
- 20% of population is still illiterate
- Fall behind other developing economies
(China / Russia)
- As a result many company are reluctant to
invest in Brazil’s economy
- Free education: would be rectified in long
term.
• By Aliomar Galvao
12. TECHNOLOGY
• Spending on R&D is stable around 1% GDP. Ensures the
constant technological progress and advancement
• Information Technology:
750.000 new IT professional by 2010
300.000 of those professional will be required to serve
the technology export market.
• Constant advancement and improvement un this area.
• By Aliomar Galvao
13. TECHNOLOGY
• Intercommunication and Global Communication:
More communication between areas of Brazil develop
trough the use of internet
More access to information technologies mean more
access to other area of the world.
• Maturity of technology:
Recently becoming up to date with use of technology;
Only some specific areas in techonology advancing fast
Rate of adaption investing US$99
• By Aliomar Galvao
14. TECHNOLOGY
• Technological Accessibility
Technological agreement: Ex, European Union –
Agreement for Scientific and Technological
Cooperative (2004)
Patents: highest levels of patents application in
South America.
• By Aliomar Galvao
15. LEGAL
• The Civil Code
- Companies become corporate entities with
separate legal personality
- Registration with the Trend Board
- Creditors generally cannot seize the partner’s
assets to pay the company debts.
- Most common types of companies:
The corporation (S.A.)
Limit Liability Quotas Company (Ltda.)• By Aliomar Galvao
16. LEGAL
• Restriction on Foreign Investment
Only minority participation in: media, financial
institution, insurance companies, Public
Health, and others
Requisition of real state: same condition apply
to foreign individual as to national individuals
or entities.
• By Aliomar Galvao
17. LEGAL
• Taxation
• Legislation varies across states and therefore
increases complexity and compliance costs.
Senate suggested a tax reform but yet to takes
place – a merger of taxes
33% of GDP is tax
• By Aliomar Galvao
18. LEGAL
• Regulation
Starting a business takes 120 days
Complete registration requires 18 procedures
taking nearly 119 days, compared with
American Latin.
• By Aliomar Galvao
19. ENVIRONMENT
• Policies for protecting the environment stopping
deforestation (in 2010 reduced by 70%) and drastically
reducing emission.
• Compelled industries to initiate eco-friendly combustion
technique
• Signed pacts with developed countries to jointly develop the
Amazon basin and alleviate deforestation by unwanted
setters.
• Emission from deforestation – Brazil is one of the largest
emitters of greenhouse gases; according to the guidelines set
out in the Kyoto Protocol.
• By Aliomar Galvao