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flag Brazil Brazil: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Brazil | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

After a slowdown in 2009, foreign direct investment (FDI) into Brazil has been booming. After having reached USD 65 billion in 2012, FDI inflows in Brazil increased to USD 64 billion in 2013, largely compensating for the deficit in the current accounts. Even though FDI influx is going through a slight decline since 2011, Brazil remains the largest recipient of FDI in Latin America and the fourth one in the world. Currently, the country is the fourth largest investor in emerging markets and the first in Latin America.

The attractiveness of Brazil for international investors is due to several factors:
- A domestic market of nearly 200 million inhabitants;
- A booming economy;
- Easy access to raw materials;
- A diversified economy, therefore less vulnerable to international crises;
- A strategic position allowing easy access to other South-American countries.

Among the factors hindering FDI are heavy and complicated tax systems, slow bureaucracy and cumbersome and rigid labor legislation. Brazil ranks 116 out of 189 countries in the classification of Doing Business 2014 issued by the World Bank.

The main investors in Brazil are the United States, Spain and Belgium. The sectors attracting most of the foreign investments are finance, the beverage industry, oil and gas and telecommunications.

 

Country Comparison For the Protection of Investors

  Brazil Latin America & Caribbean United States Germany
Index of Transaction Transparency* 6.0 4.0 7.0 5.0
Index of Manager’s Responsibility** 7.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 5.3 5.0 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 66,66065,27264,045
FDI Stock (million USD) 696,507745,089724,644
Performance Index*, Ranking on 181 Economies 34--
Potential Index**, Ranking on 177 Economies 25--
Number of Greenfield Investments*** 515459359
FDI Inwards (in % of GFCF****) 14.016.015.7
FDI Stock (in % of GDP) 28.133.132.3

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Brazil

Strong Points
Brazil has Universities that perform just as well as their counterparts in the OECD and a very big manpower reserve educated to all levels.  It also has extensive raw material resources. A number of sectors offer good business opportunities. The Brazilian economy is diversified and more and more manufactured goods are produced and exported. The potential of the Brazilian domestic market as well as the low cost of labor are elements which may attract foreign investors.
Weak Points
Despite being open to world trade, several administrative barriers cripple international trade. Valuing the real against the dollar automatically reduces the country's competitiveness against Asian competitors in some sectors. The Labour laws are very onerous, involving substantial costs to foreign companies and keeping a good part of the local business in the informal sector.
Moreover, foreign investments are restricted in several sectors, such as insurance, aviation and media.
Finally, some foreign investors have encountered obstacles engaging with regulatory agencies. They notably underline the high level of regulatory risk.
Government Measures to Motivate or Restrict FDI
The Brazilian government encourages and promotes FDI. Most of the barriers to foreign investor activity have been removed, particularly on the stock market. A very large number of public companies have been privatized and many sectors deregulated over the last fifteen years.
The National Investment Bank (BNDES) encourages foreign investment. In 2013, BNDES disbursements rose 22% to reach BRL 190 billion, making it one of the largest development banks in the world.
Bilateral Investment Conventions Signed By Brazil
Brazil has signed bilateral agreements for the protection of foreign investment with 14 countries, but 7 of them have not been ratified by the Congress.
To see the list of countries, click here.
To see the conventions, click here.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Guaranteed.
Acquisition of Holdings
The investment regime in Brazil is a liberal regime which allows foreign investors to have a majority share in the creation of their company.
Obligation to Declare
The agency for the promotion of foreign investment in the country gives information about the authorizations necessary for setting up. All inflows of capital must be declared to the Central Bank.
Competent Organization For the Declaration
Central Bank of Brazil
Requests For Specific Authorizations
Foreign investment is restricted and requires special authorization in the nuclear, health, land ownership, fishing, post office, telegraphs, aviation, aeronautics, media communications and highway freight sectors.

Learn more about Foreign Investment in Brazil on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
BNDES
Agency for the promotion of investment in Brazil
FINAME
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Brazil
Comprasnet, Tenders
DgMarket, Tenders Worldwide
Other Useful Resources
Central Bank of Brazil
 
 

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Learn more about Investing in Brazil on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: February 2015