Brazil InfrastructureBy: Rebecca Lee & William Kim

Country/Region Information

• Largest Country in South America and the fifth largest country in the world.

• Only Portugese-speaking country of the continent • World’s eighth largest economy at market exchange rates and

the ninth largest by purchasing power parity. • Predominantly Roman-catholic and multi-ethnic society • Home to a diversity of wildlife, natural environments, and

extensive natural resources in a variety of protected habitats.

Global Location

• Occupying nearly half of the South American continent, it covers an area of 8,511,965 sq km

• Divided into 26 states and one federal district• The federal district, including the capital of

Brasília, is surrounded on three sides by the state of Goiás and on the fourth by Minas Gerais.

Statistics• GDP (Gross Domestic Product)– $1.993 trillion (2008 est)

• Official Exchange Rate: $1.573 Trillion• GDP (Per Capita) $10,000• Composition by Sector: – Agriculture: 6.7%– Industry: 28%– Services: 65.3%

• Labour Force: 93.65 million people• Population: 193,739,269• Government type: Federal Republic• Capital: Brasilia

International Trade Statistics

State of the Area’s Infrastructure

Regulatory Agencies in BrazilRegulatory Agency Competence Law

Agência Nacional de Energia Elétrica (Aneel) Electricity 9.427 (Dec. 26th 1996)

Agência Nacional de Telecomunicações (Anatel) Telecommunication 9.472 (Jul. 16th 1997)

Agência Nacional do Petróleo (ANP) Oil & Gas 9.478 (Aug. 6th 1997)

Agência Nacional de Vigilância Sanitária (Anvisa) Health Surveillance 9.782 (Jan, 26th 1999)

Agência Nacional de Saúde Suplementar (ANS) Health Insurance 9.961 (Jan 28th 2000)

Agência Nacional de Transportes Terrestres (ANTT) Railway and Road 10.233 (June 5th 2001)

Agência Nacional de Transportes Aquaviários (Antaq) Harbor 10.233 (June 5th 2001)

Agência Nacional de Cinema (Ancine) Movie Industry PM 2228 (Sept. 6th 2001)

Sound Infrastructure

– As with any economic sector, the development of the IT-BPO industry depends on a robust infrastructure. \

– Brazil offers a world-class infrastructure and a strongly globalized market, especially in the IT-BPO sector, with a mature regulatory environment and business practices.

– Brazil’s basic infrastructure is currently undergoing wide-ranging expansion through the Program for Accelerated Growth (PAC), launched in 2007 by the federal government. Within the scope of this program, the public and private sectors intend to invest around US$ 273 billion in energy, logistics, social, and urban infrastructure.

Technology Parks• Brazil has speeded up the growth and maturity of technology parks

since 2000, and the objective is to invest in further development and grow.

• All major tech parks have an educational center as an active component. Brazil currently has 30 technology parks, including units already operating and those in the final stage of implementation, which form dynamic networks and connect various points in the value chain, including IT-BPO companies, universities, research institutes, consulting and service firms, the government, business fostering agencies and clients.

• The report details information on 18 of these technology parks, those that are fully operational and with the required infrastructure in place for Brazilian and international companies to operate.

Communications

• Communications services have spread throughout Brazil and continue to develop rapidly. Gartner states that Brazil’s infrastructure can support the expected double-digit annual growth in IT-BPO services.

• High quality and 100% digital fiber optic networks connect all large cities internally and also to hubs outside the country, providing high-speed internet connections. Internet access doubled from 2005 to 2008 and the broadband sector is expanding rapidly.

Communications (con’t)

• Recent data released by the British research institute Point Topic shows that Brazil ranks ninth globally in total broadband connections. Brazil’s mobile telephone market is the fifth largest in the world, with 121 million handsets, and the fixed-line telephony market is the fourth largest.

• Brazil’s IT-BPO infrastructure has an advantage over that in the other BRIC countries, according to the Economist Intelligence Unit, whose methodology takes into account the money spent on hardware, software and IT services, as well as the number of computers and broadband connections.

Transportation• Brazil’s road system covers 1.6 million kilometers and serves the

whole country. Brazil also has a 44,000-kilometer water transport system, which is important in transporting agricultural production for exports. The country’s rail system is 30,000 kilometers long.

• The country has 34 large international airports, 33 domestic airports, and 2,498 smaller airports. Domestic and international airlines offer short-haul direct flights, easily connecting main Brazilian cities to main cities in North America and Europe.Air and land transportation are key contributors to the efficiency of the postal service, offering an express delivery system that covers the whole country and delivers over 32 million letters and packages every day. All large international dispatch companies, including FedEx, UPS, and DHL operate in Brazil.

Degree of Service

• The services sector accounted for 59.9 percent of the gross domestic product in 1999. Government participation in this sector was extremely high, with interests in land, air, and water transportation; postal, telecommunications, and financial services; and research and development.

• Approximately 42 percent of the workforce was employed in the services sector. The service sector's contribution to gross domestic product was 48.3 percent in 1979, 48.8 percent in 1989, and 59.9 percent in 1999. Average annual growth was 1.9 percent for the 1979-89 period and 2.7 percent for 1989-99.

Impact on International Trade• Brazil's fast-growing economy is fuelled by a dramatic increase in its

exports. So, who are Brazil's partners and what are they buying?• In 2005, Brazil's total exports more than doubled to US$118 billion

from $58 billion for 2001. Over that same period, imports into South America's largest country grew some 30% to $74 billion from $56 billion.

• Brazil's trade surplus has expanded more than 16-times to $47 billion from $2.6 billion over the past 4 years.

• With a population of almost 200 million, Brazil is the world's leading exporter of sugar, coffee, beef and orange juice. Soybeans are Brazil's fastest-growing shipments, powered by the appetites of China's 1.3 billion consumers. Other major exports include aircraft, vehicles, iron ore, steel, textiles and footwear.

Impact on International Trade • Below is a list of the top-ten countries purchasing Brazilian exports in 2005.

Although the U.S. is the largest single country to buy the South American giant's exports, Europe represents Brazil's largest customer. In eleventh and twelfth place, the U.K. and France accounted for 2.2% and 2.1% of Brazil's exports respectively.– United States (18.9% of total exports) – Argentina (8.4%) – China (5.7%) – Netherlands (4.5%) – Germany (4.2%) – Mexico (3.5%) – Chile (3.1%) – Japan (3.0%) – Italy (2.7%) – Russia (2.5%)

.

Infrastructure Competitive Advantage

• Transportation – ex. Highways have the advantage over railways that the maintenaince funds can be

more evenly distributed (Brazilian roads reach almost every city, whereas railways have always been concentrated), allowing more people to see the government working.

• Technology and Communications– ex. Brazil’s IT-BPO infrastructure has an advantage over that in the other BRIC

countries, according to the Economist Intelligence Unit, whose methodology takes into account the money spent on hardware, software and IT services, as well as the number of computers and broadband connections.

• Foreign investments Regarding Brazil– ex. Foreign companies may participate in bids for infrastructure projects either

directly or through the formation of a consortium. The advantage of a consortium is that the foreign company can take part in mainstream projects without the risks associated with a lack of knowledge of the Brazilian market and its regulatory rules. The bidding process usually requires bidders to incorporate a specific purpose vehicle to implement the infrastructure project.

Changes for the Future• Transportation: Change bylaws

– creating new and urban transport, metro line infrastructure, and tunnels.

– to create a 12.8km underground extension with five stations linking the city's central and southwest areas. It is expected to transport 900,000 people a day.

• International Trade Developments in Brazil present international companies with investment opportunities across diverse sectors such as info communications technology (ICT), oil & gas, ports, airports, power generation, waste/ water treatment, township/ industrial estate planning, real estate, tourism and shipping & logistics.