Overview
- Population: 210 million (2016)
- Area: 8,515,770 km2
- Official language: Portuguese
- GDP: US$ 2.346 trillion (2014)
- Major imports: fuels and oils, machinery, electrical equipment, vehicles and vehicle parts, chemicals, plastics, iron and steel
- Major exports: iron ore, oil, soy beans, sugar cane, coffee, chicken, auto and autoparts, airplanes
- Largest import partners: USA, China, Argentina, Germany, Japan
- Singapore is the 4th largest Brazilian trade partner in Asia
- Currency: Brazilian Real (BRL)
Understanding Brazil
Federal Republic of Brazil, occupies about half of the land area of South America. Brazil is divided into 26 states and a Federal District, grouped into five regions for administrative and political purposes: the North, the Northeast, the Central West, the Southeast and the South. The population estimated at 206 million (2014), the world’s fifth-largest country and the largest economy in Latin America.
It is a federal republic with a democratic government composed of an executive branch (headed by a president), a bicameral legislative branch (made up of a House of Representatives and a Federal senate) and a Judicial branch. The country has been politically stable since its current constitution was adopted in 1988, even though the multiplicity of political parties – there are more than 20 – means that coalition governments are normal.
MERCOSUL
Brazil is a member of the Southern Common Market (Mercosur), which was formed in 1991 and includes Argentina, Paraguay, Uruguay and Venezuela. The Mercosur bloc represents a combined market of well over 270 million consumers and a collective GDP of $2.9 trillion. It provides for a common external import tax rate for imports from non-member countries – imports from members are generally tax exempt – and allows the free movement of goods and people among member countries.
WTO
Brazil is also a member of the World Trade Organization and has trade agreements with various other countries.
Understanding Brazilians
- Brazilian business people are sensitive to rank. If you intend to negotiate or meet with senior decision makers in Brazil, send representatives with an equivalent level of authority.
- Brazilians have a relaxed attitude to time, so business negotiations will progress more slowly in Brazil than in many other developed countries. A meeting can be delayed or cancelled without warning and your schedules should be set up to accommodate this fact.
- When you meet your Brazilian counterparts for the first time, they will expect you to address them by their titles and surnames. Brazilians often address and refer to their colleagues only by first name.
- Handshakes are the most common form of greeting between business colleagues. In informal situations, men and women may greet each other with one or two kisses on the cheek or may briefly embrace.
- Clothing for business occasions is expected to be formal and conservative. This preference continues even after you have gotten to know your business colleagues and the atmosphere has become more relaxed.
Major Opportunity Sectors
- Energy
- Environmental Technologies
- Aerospace
- Information Technology
- Transportation Infrastructure
- Medical Equipment
- Mining
- Oil and Gas
- Safety and Security
Presence in Brazil
Foreign companies are permitted to establish and own Brazilian businesses, subject to some restrictions. Brazilian law does not distinguish between foreign and domestic companies or individuals when businesses are being set up. Establishing a Brazilian business entity can be a complex undertaking. The Government is trying to simplify the process, but you’ll definitely need legal guidance and advice to smooth your way. There are two major types of Brazilian companies, the Sociedade Limitada and the Sociedade Anônima (S.A.). Most foreign – owned businesses fall into one category or the other.
Financial and Tax Systems
Brazil’s financial system is robust, sophisticated and highly efficient. It is also quite diversified and includes not only commercial banks but also investment banks, finance companies, savings and loan institutions, and insurers. The country’s tax regime treats domestically owned firms and foreign – owned businesses in exactly the same way. It is complex, however, and has a multitude of regulations.
Legal Approach
In Brazil, civil and commercial litigation fall under the jurisdiction of either the federal courts or the state courts. Most of the lawsuits submitted to the federal courts involve Brazil’s federal government. Business disputes between private parties, by and large, fall under the domain of the state courts.
Dispute settlement
The state courts are overburdened and contract disputes can take years to settle, so it is almost always preferable to avoid litigation. Even if you appear to be unquestionably in the right, legal action may not be worth your while.
Intellectual property protection
Brazil has ratified the Agreement on Trade-Related Aspects of Intellectual Property Rights and has signed the Bern Convention on Artistic Property, the Patent Cooperation Treaty, the Convention on Plant Variety Protection, and the Paris Convention on Protection of Intellectual Property. Unfortunately, intellectual property (IP) theft remains an ongoing problem in Brazil, so protecting your IP is crucial when you are doing business in the country.
Investing in Brazil
Brazil’s investment climate
Brazil is a generally friendly environment for FDI. Its government does not distinguish between domestic and foreign investors, its financial system is robust, inflation has been under control for a decade and its large, diverse economy offers many opportunities in both the manufacturing and service sectors. Brazil also imposes few restrictions on ownership or on the transfer or conversion of funds associated with foreign investments. Investor rights are well protected and there are no recent examples of Brazil expropriating foreign-owned investments.
Foreign exchange controls
Foreign investments must be registered with the Brazilian Central Bank (BACEN) through the bank’s electronic registration system known as RDE-IED/ SISBACEN. This must be done within 30 days of the date on which the investment was made. Remittance of funds out of the country must be made using prescribed arrangements as set out by the International Capital and Foreign Exchange Market Regulation (RMCCI).
Investment incentives
While Brazil’s federal government does not offer direct tax incentives for foreign investment, it does operate programs designed to encourage economic development in specific regions, primarily the Northeast and the Amazon.
The Manaus Free Trade zone
Brazil has one large free trade zone, the Manaus Free Trade Zone (MTFZ). Located at Manaus in the state of Amazonas, the MTFZ offers tax incentives intended to attract both domestic investment and FDI to the underdeveloped Amazon region