Interview with Lucas Fiuza, Business Director, Apex-Brasil
Apex-Brasil, the Brazilian Trade and Investment Promotion Agency, is the body charged with promoting Brazilian business abroad and attracting overseas investment. The organisation plays a critical role in both promoting Brazilian products and services around the world. Lucas Fiuza, Business Director at Apex-Brasil, reveals why Brazil should be seen as a top investment destination worldwide.
The world is investing in Brazil – on a massive scale. When the events of 2020 disrupted supply chains and shelved infrastructure projects, Brazil’s annual foreign direct investment (FDI) inflows of $75bn, the fourth-largest in the world, took a heavy hit. Brazil has since bounced back in style to go some way towards recovering the losses from this period and a bold new FDI strategy has taken shape, one which is leading global investors to take renewed interest in the largest economy of Latin America – even as major new economic challenges loom on the horizon.
What makes Brazil such an attractive destination for foreign direct investment? What would you like investors to know about Brazil as an investment destination?
Brazil is the tenth-largest economy in the world, according to the International Monetary Fund (IMF), and the largest in Latin America. We are a leading economic force on the global stage. Brazil is seen as one of the most attractive countries for foreign investors within Latin America, and this appeal is due to the size of our domestic market (circa 215 million people), wealth of raw materials, and our heavily diversified economy in products and services.
Besides that, the federal government delivered major structural advances that had been expected for decades, in less than three years, such as the Economic Freedom Law, Social Security System Reform, the independence of the Central Bank, the new Sanitation Law, Railways Law, Start-ups Law, and many other measures and reforms to reduce bureaucracy and improve the business environment.
In June, the United Nations Conference on Trade and Development (UNCTAD) pinpointed Brazil as one of the greatest benefactors of a continental rebound that saw Latin America gain back lost ground on FDI inflows as a result of the pandemic. Brazilian FDI soared by 78 per cent to $50 billion during 2021, with agribusiness, IT, and financial services all playing a notable part in Brazil’s bounce back.
Fitch Ratings determined that the reopening of the country’s high-performing sectors has helped it to become more economically resilient. Brazil leads the way in Latin America’s economic rebound, and this is testament to the range of exports that Brazil has become known for, from exotic fruits and fair-trade coffee to the creative arts.
Lucas believes that European countries are realising the calibre of opportunities in Brazil as the world reawakens from the pandemic. In response to the emerging challenges of the 2020s, he believes there are many areas where Brazil and Europe can support each other in achieving mutual objectives, including in agricultural innovation, science, and technology.
Which sectors or auctions are most likely to do well this year? Are there any that investors should be paying particular attention to?
Brazil expects to build on the success of the past few years and continue attracting investment throughout 2022 that will help propel the economy into new territories and sectors. It promises to be a busy and exciting year for us. There are 149 state assets up for auction – including two of Brazil’s busiest domestic airports, major cross-country highways, railway lines, and several port terminals, such as the Port of Santos, considered the largest in Latin America.
This takes place in the context of global FDI flows to Brazil bouncing back after the pandemic slump. This is an evolving landscape, exemplified by the scale of investments and with an intensified focus on sustainability and the environment in the wake of COP26. Renewable energy sources will hopefully be bolstered by more investments, with the first wind-energy offers scheduled for 2022. In October, the government published the “inter-ministerial decree” creating the Single Portal for the Management of the Use of Offshore Areas for Power Generation, giving Brazil a fundamental step towards security and the facilitation of new investments. Further investments in rail infrastructure will give a major boost to Brazil’s low-carbon transport, which we are helping to advance, while sustainable tourism is also high on the agenda to preserve our country’s beautiful and unique national parks.
Brazil’s 5G spectrum auction in November 2021 was the second-largest single auction in the country’s history. What precedent does this set for the future of FDI in Brazil?
Brazil has one of the largest mobile markets in Latin America, due to the sheer size of its population. The multi-spectrum auction, intended to push the development of 5G and originally scheduled for March 2020, was delayed due to interference issues with satellite TV broadcasts and the pandemic, and was completed in November 2021. This multi-band auction was one of the largest in history. The licensees are obliged to provide 5G services to all capital cities by November 2022.
Extending Brazil’s 5G service to more of the population will help us to enhance people’s mobile connectivity to essential services, enabling them to work more effectively, and improve accessibility to financial services and e-commerce. Providing these tools is already heralding another industrial revolution in digital technologies, helping to innovate businesses, and setting the stage for more inward investment from abroad.
How is FDI improving the lives of Brazilians?
It has an enormous impact, especially on the tangible aspects of everyday life. We have a responsibility to ensure that we and the partners we work with are making a positive difference to the communities to which investment is being channelled. FDI extends the lifespan and enhances the quality of existing services that are greatly relied upon, but also integrates new infrastructure to improve efficiency. For instance, investment helps to provide modern sanitation in more deprived metropolitan areas, while better broadband coverage improves social connectivity, financial inclusion, and productivity.
Renewable energy sources, another key area benefiting from FDI, not only allows our vast country to harness the benefits of a diversified energy mix, but it significantly improves the local environments of our communities. Intense and sustained investment in renewable energy resources will naturally have knock-on effects on education and training, producing a new generation of highly skilled workers equipped with the necessary technological expertise.
Are there any restrictions that international investors need to be aware of?
Industries and certain businesses that remain predominantly under the state’s control are generally off limits to a lot of investment. These include the press and media, as well ownership of rural properties and border areas. With specific regard to Brazil’s media (newspapers and broadcasting outlets), FDI is capped at 30 per cent. Furthermore, there are also limitations on foreign ownership of financial institutions.
Nevertheless, restrictions like these have been consistently softened, removed, or reduced to increase the competitiveness of the Brazilian market in areas such as insurance, medical services, and air transportation. Embraer, for example, remains the world’s third-largest aircraft manufacturer after Boeing and Airbus. Other industries are increasingly becoming more competitive, including rail and health services, due to a more positive business environment.
Are there any noteworthy incentives, programmes, or schemes helping to attract FDI into Brazil?
The Brazilian government is welcoming investment through a variety of channels and mediums, such as the Investment Partnership Programme (PPI). Through this, we have reinvented ourselves as an investment destination for large-scale infrastructure projects as one example. Launched in 2019, the PPI is now in its fourth year and remains the primary vehicle through which Brazil attracts FDI. After a hiatus in 2020 caused by the pandemic, the programme picked up again in 2021 with over 50 vigorous auctions, including the largest telecom auction in Latin America, raising a total of 47.2 billion reais (£7.2 billion).
The Brazilian government also extends tax benefits for investments in less-developed parts of our country, such as the northeast and the Amazon region, with equal application to both foreign and domestic investors. An example of this is the Manaus Free Trade Zone (ZFM). With this, corporate income tax is reduced by 75 per cent for businesses, as well as being exempt from import duty on goods coming into the ZFM, if they are locally consumed or re-exported. This encourages hyper local investment and consumption to spur development and growth, which, in our eyes, ultimately helps to sustain our economy and grow from the inside out.
Lucas Fiuza holds a degree in Tourism and Hospitality from the University of Fortaleza (2013). He holds a postgraduate degree in the Austrian School of Economics, from the Ludwig von Mises Brasil Institute in partnership with the Centro Universitário Ítalo Brasileiro (2019). He has extensive professional experience in business management and international investments, especially in the real estate and tourism sectors. He was Chief Executive Officer (CEO) and member of the Board of Directors of companies linked to civil construction and real estate development for more than a decade.
Since July 2021, Fiuza has assumed the position of Business Director at the Brazilian Trade and Investment Promotion Agency (Apex-Brasil), being responsible for the Agency’s strategy for promoting Brazilian products and services abroad, as well as supporting the internationalization of Brazilian companies and the attraction of foreign direct investment to strategic sectors of the Brazilian economy. Lucas has been carrying out an intense global agenda to publicize the real improvement in the scenario of the national business environment based on major structural reforms and an unprecedented market opening in Brazilian history.