By Roberto Escoto, Corporate Management Director, Apex-Brasil
This year, the success of the annual Brasil Investment Forum was a testament to and example of how Brazil has been innovating to engage its investment community notwithstanding the enormous challenges posed by the global pandemic.
Our annual signature event, the Brasil Investment Forum (BIF) took place on 31 May and 01 June. This year it was a fully-online event, but that didn’t diminish the attractiveness of the event for the investor community: on the contrary, while the last edition gathered 1,500 participations including CEOs, governments and international organisations, this year’s edition of the BIF saw a huge 6,300 participants.
The event, organised by Apex-Brasil in partnership with the Interamerican Development Bank (IDB) and the Brazilian Federal Government, was a truly unique opportunity for investors to learn about new investment projects, hear from a broad range of Brazilian stakeholders including ministers, business leaders and sector experts, and engage in one-to-one meetings.
Just over a year ago the idea of running this major investment event as pure-play digital was somewhat inconceivable, and the fact that we’ve been able to dynamically shift gear proves our ability to quickly adapt to changing circumstances to the benefit of our investors and stakeholders. Indeed, I would submit that Brazil’s continuing success in continuing to attract the right investors in these challenging times is in no small measure due to us scaling up our digital capabilities, including promoting our infrastructure portfolio online.
Let’s be clear: the global pandemic has had a massive impact on FDI flows. Last year global FDI was $859bn, a 42% fall on the $1.5tn in 2019 and far worse than anything experienced in the 2008 financial crisis. The pandemic has also led to increased risk aversion among global investors who are seeking to make secure investments with a lower risk profile and long-term return. Multinationals are reallocating financial, human and technological resources with a focus on creating shorter production chains and supply routes.
Our digital events have massively expanded the range and accessibility of information available to potential investors. Our social media platforms are updated with fresh and live content. We have also hosted a range of webinars on Brazil’s investment opportunities in sectors including infrastructure, oil and gas, agribusiness, renewable energy, research, development and innovation. In 2020 the Invest in Brasil Infrastructure series gathered over 2,000 participants across five events. We have created an English-language hotsite of pandemic-related information for foreign investors which was recognised by UNCTAD[1] in their July 2020 report on innovative and proactive measures taken by Investment Promotion Agencies (IPAs) worldwide.
We will also be rolling out in the near future an interactive online platform where potential investors can find up-to-date and reliable information on investments, business opportunities, projects and potential partners, and can get direct access to our dedicated team of specialised investment analysts in Brazil and our global offices.
But Brazil’s success is not just down to its digital responsiveness. It also offers an investment landscape that is ripe and attractive to the international FDI community. Investors are continuing to seek out the right FDI opportunities, and with a keener focus on sectors linked to the Sustainable Development Goals (SDGs) like infrastructure, sanitation and access to clean water, innovation, renewable energy, mobility, health and education.
Brazil has a very diverse portfolio of investment opportunities in sectors closely associated with the SDGs. This includes in particular infrastructure, where we are currently rolling out an ambitious concessions programme with a large number of auctions planned, and in renewable energy, with ongoing projects in green hydrogen, offshore wind and gas.
We are working hard to create a highly favourable investment climate across these sectors and others. For example, in July 2020 Brazil introduced a Basic Sanitation legal framework to provide universal water and sewage services for the entire population by 2033. Another example of the legislative support being provided is federal bill 576/2021 that regulates power generation in maritime areas to support the energy transition and expand renewables in Brazil’s energy mix.
Over 80% of the country’s energy is generated by renewables, and new regulatory frameworks are being adopted to support offshore wind and green hydrogen projects, as well as natural gas as a transitional energy. This legislative support will offer foreign investors access to major privatisation, concession and public-private partnership (PPPs) projects across the country.
Infrastructure is another priority, as reflected by the 94 auctions to take place in 2021 aiming to secure some $64.4bn in infrastructure investments. To put those numbers into perspective, in 2019-2020 we held a total of 65 auctions attracting over $97.6bn in projected investments and $19.6bn in concession fees.
Brazil remains a hugely attractive investment destination and enjoys a robust reputation as a competitive partner for international investors who want easy access to markets. It is a hub not only for business production chains in the region, but its unique location at the crossroads from North America, Asia, Africa and Europe and its pro-business culture all add to Brazil’s attractiveness and high value proposition for foreign investors.
Our success in these difficult times has been maintaining close contact with our clients and prospective investors and making it easy for them to engage. That means keeping channels of communications open, bringing events to where they are rather than them to where we are and seeking continuous feedback on the eventual hurdles they may be facing. Our expanded advocacy demonstrates clearly to the international investment community that Brazil remains open for – and to – business.
It goes without saying that the economic landscape remains uncertain and that there are many challenges to overcome. As we have witnessed a shift in investments to a lower risk profile, we expect to see a reciprocal change in FDI strategies. Those with higher risk, including capital intensive projects, will decrease in favour of more brownfield modes of entry such as joint ventures, partnerships and mergers and acquisitions.
Recent figures from the Brazilian Institute of Geography and Statistics (IBGE) have shown that Brazil’s GDP grew by 1.2% in Q1 2021 totalling just over US$400bn[2]. This is fantastic news considering the past four quarters have seen drops in growth. It shows our economy is on the mend and that Brazil remains open for business.
The Brazilian Central Bank recently reported an income of US$17.7bn in the first three months of 2021. This represents a 40.3% increase on the same period last year (US$12.6bn). There are many exciting investment opportunities to be had in Brazil, and at Apex-Brasil we will continue working tirelessly to provide support and communicate these opportunities to all our international investors around the world.
About the Author
Roberto Escoto, Corporate Management Director of the Brazilian Trade and Investment Promotion Agency (Apex-Brasil), is a Major General of the Brazilian Army (Retired). He graduated from the Brazil Military Academy (AMAN) and holds a master’s degree in International Relations from the University of Brasilia (UnB) and a PhD in Military Sciences from the Army Command and General Staff College (ECEME).
Along 37 years in the military, he served in several advisory, leadership and command positions in Brazil and abroad. Between 2008 and 2010, he was the Army Attaché’s Deputy at the Brazilian Embassy in the United States and Canada. During this period, he headed the Brazilian Army Commission in Washington (CEBW), a body responsible for international purchases of defence material. He also worked at the United Nations Stabilization Mission in Haiti (MINUSTAH) and at the United Nations Department of Peace Operations in New York.
References
