Brazil: Foreign Direct Investments

Brazil FDI facts and figures

After the global recession in 2009, Brazilian foreign direct investments (FDI) boomed and then slowed down in 2010. In 2013, FDI inflows reached an incredible USD 64 billion which slightly declined to USD 62 billion in 2014. Even so, Brazil remains to be the fifth largest recipient of FDI in the world and the biggest recipient in Latin America. Besides that, Brazil has been ranked as the fourth largest investor in emerging markets across the globe.

Brazil attracts a lot of foreign investors due to a number of factors including:

  • Microeconomic stability
  • Huge domestic market – over 200 million inhabitants
  • Great and diverse infrastructure
  • Strategic locations – easy accessibility to South American countries
  • Advanced technology and innovation
  • Availability of raw materials

The main sectors attracting foreign investment in Brazil are telecommunication, oil and gas, the beverage industry and the financial industry.

Why invest in Brazil?

The government of Brazil promotes and encourages FDI in a great way. Barriers that hinder the activities of foreign investors have been removed; particularly those in the stock market.

Many sectors have been deregulated and public companies privatized to give way to FDI. The Brazil National Investment Bank (BNDES) greatly supports foreign investment. The bank’s disbursement reached BRL 190 billion in 2013, making it one of the biggest development banks in the globe.

The Brazilian government protects FDIs and it has signed bilateral agreements for protection of FDIs with 14 countries. No major controversies have been reported over the past few years.

Another motivator of investing in Brazil is that there is freedom of establishment. Foreign investors have equal rights to open up companies or business premises, the same as Brazilian citizens. Besides that, foreign investors have a right to acquisition of holdings. They are allowed to have majority of shares when establishing a company.

The Brazilian government promotes FDIs in the form of tax aid and exemption. For instance, companies in the communication and IT sectors, importing more than 80% of their production, are exempt from PIS and COFINS taxes. Companies established in economically disadvantaged areas of Brazil benefit from tax reduction.

As Igor Cornelsen, a great Brazilian investment advisor, would say, “Brazil has several attractive qualities for investors, regardless of all the scandals around it.” The huge population of more than 200 million people provides a great market for multinational companies. When it comes to infrastructure and technology, investors are spoiled for variety. If what Mr. Cornelsen says is something to go by, Brazil is worth investing in.

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