Brazil is a country in South America that occupies half the continent’s landmass. It is the fifth-largest country in the world, exceeded in size only by Russia, Canada, China, and the United States, though its area is greater than that of the 48 conterminous U.S. states.
Brazil is the fifth most populous country on Earth and accounts for one-third of Latin America’s population. Brazil currently has the ninth-largest economy in the world.
Here are the top investment opportunities in Brazil:
- Agriculture
- Minning
- Aeronautics
- Pharmacy
- Automobile
- Iron and steel
- Chemical sectors
It has a gross domestic product of 2.05 trillion dollars which accounts for slightly more than 2.5 percent of the global GDP in 2020. Brazil would account for 2.5 percent of the world’s wealth if one measured it by all of the goods and services it exchanged in 2020.
Brazil is the 11th largest recipient of FDI in the world in terms of inflows and the largest in Latin America and the Caribbean. The main investing countries in Brazil are the Netherlands, the United States, Germany, Spain, the Bahamas, and Luxembourg.
Top Reasons Why You Should Invest In Brazil
Investments are mainly oriented towards oil and gas extraction, the automotive industry, financial services, commerce, electricity, and the chemical industry. The investment regime in Brazil is liberal, allowing foreign investors to have a majority share in the creation of their company.
The Key Sectors of the National Economy are Agriculture which includes sugar cane, coffee, oranges, soya, bananas, walnuts, cashew nuts, corn, pineapples and peppers, beef, poultry, tobacco leaves; mineral ores, iron, and aluminum. Foreign capital is prohibited in activities relating to nuclear power, mail and telegraph services, and the aerospace industry.
The country is increasingly asserting itself in aeronautics, pharmacy, automobile, iron and steel, and chemical sectors. The Petrogas sector has a large potential and Brazil is the largest market in Latin America for renewable energies. The government of Brazil encourages foreign investment in the form of tax exemption, aid, funding, and agreements limiting double taxation. Foreign investment is restricted and requires special authorization in the following activities: mineral resource prospecting and mining in border areas, telecommunications, broadcasting companies, and healthcare.
Brazil is unique in South America because, following independence from Portugal, it did not fragment into separate countries as did British and Spanish possessions in the region; rather, it retained its identity through the intervening centuries and a variety of forms of government.
Because of that hegemony, the Portuguese language is universal except among Brazil’s native Indians, especially those in the more remote reaches of the Amazon basin. At the turn of the 21st century, Brazilians marked the 500th anniversary of Portuguese contact with a mixture of public celebration and deprecation.
Brazil is the fifth most populous country on Earth and accounts for one-third of Latin America’s population.
Brazil's economic and social progress between 2003 and 2014 lifted 29 million people out of poverty and inequality dropped significantly The income level of the poorest 40 percent of the population rose, on average of 7.1 percent between 2003 and 2014, compared to a 4.4 percent income growth for the population in the previous year.
Brazil currently has the ninth-largest economy in the world. It has a gross domestic product of 2.05 trillion dollars which accounts for slightly more than 2.5 percent of the global GDP in 2020. Brazil would account for 2.5 percent of the world’s wealth if one measured it by all of the goods and services it exchanged in 2020. Thus, Brazil’s emerging market has become a reputable force on the world economic stage. It has now surpassed some developed economies in GDP. For example, Brazil’s economy is now larger than Italy’s, which accounted for 2.4 percent of global GDP in 2020. Several factors contribute to the success of Brazil’s emerging market: better international relations, the adaptation of technology, and improved education. However, the most important element of an emerging market is a solid mix of domestic companies.
Foreign Direct Investment In Brazil:
Foreign direct investment into Brazil boomed between 2009 to 2011 but had been slowing down ever since. However, according to the World Investment Report 2021 published by UNCTAD, FDI inflows have decreased by 62 percent, from 65 billion dollars in 2019 to 25 billion dollars in 2020.
As a result of the COVID 19 pandemic, Brazil saw a significant decrease in FDI in 2020, as the privatization program and infrastructure concessions were paused for several months. The most affected industries were transportation which had a decrease in the inflow of over 85 percent, financial services with a 70 percent decline in inflows, oil and gas extraction with a 65 percent decrease in FDI, and the automotive industry which was also contracted by 65 percent.
Nevertheless, there were still some significant investments made in the country even amid the COVID 19 crisis. In January 2021, U.S based New Fortress Energy announced that it would buy Hygo Energy Transition and Golar LNG, in a combined 5 billion dollars deal that marks the group's entry into the Brazilian natural gas sector and makes the company the leading gas to the power company in Brazil. Additionally, with Brazil opening its natural gas industry to private investors, other major oil companies, including BP PLC and EIG Global Partners, are also looking into multibillion-dollar investments in the country. On the other hand, Ford Motor Co. also announced in January, that it would close all three plants in Brazil and stop producing automobiles in the country, where it had been operating since 1919, as the pandemic amplified persistent industry idle capacity and slowed sales, resulting in significant losses. The stock of FDI has remained stable over the past two years and reached 608 billion dollars at the end of 2020.
Brazil is the 11th largest recipient of FDI in the world in terms of inflows and the largest in Latin America and the Caribbean. The main investing countries in Brazil are the Netherlands, the United States, Germany, Spain, the Bahamas, and Luxembourg.
Investments are mainly oriented towards oil and gas extraction, the automotive industry, financial services, commerce, electricity, and the chemical industry. Brazil ranked 124th out of 190 countries in the World Bank's 2020 Doing Business report, a significant decrease from the previous year when it ranked 109th. However, the country is one of the biggest FDI receivers in the world. Brazil is an attractive market for international investors due to several factors: a domestic market of nearly 210 million inhabitants, availability of easily exploitable raw materials, a diversified economy that is less vulnerable to international crises, and a strategic geographic position that allows easy access to other South American countries.
What to consider if you invest in Brazil:
Extensive natural resources, A large middle class and a large domestic market with the 5th largest population in the world, A strategic geographic location, And a diversified economy that is well anchored in international exchanges.
The investment regime in Brazil is liberal, allowing foreign investors to have a majority share in the creation of their company.
The Possibility of Buying Land and Industrial and Commercial Buildings:
Foreign individuals residing in Brazil and foreign companies authorized to operate in Brazil can acquire or lease rural properties within certain limits. For legal entities or their equivalent, acquisition of any area considered rural is subject to prior approval by the INCRA and fulfillment of essential requirements.
The risks of expropriation are very low today. Article 5 of the Constitution states that an individual may have rights and property restricted by law only if ordered by the judiciary after a full and solid defense. The public administration has the power to expropriate property when faced with a public and or social interests, or for reasons of public utility. Compensation is provided in case of expropriation, especially for foreigners.
Investment Aid:
The government of Brazil encourages foreign investment in the form of tax exemption, aid, funding, and agreements limiting double taxation.
The special customs regime for the export and import of goods for exploration and production of petroleum and natural gas is a tax incentive allowing the import of certain goods by suspending the import duty, federal excise duty, PIS import, COFINS import, and freight surcharge for merchant's vessels.
Furthermore, a special regime of incentives for the development of infrastructure exists and consists of suspending PIS and COFINS for the sale or import of new machinery, tools and equipment, construction materials, and certain services, used or incorporated in infrastructure projects in the transport, ports, energy, basic hygiene, and irrigation sectors.
A tax reduction or exemption is granted by the federal government for construction, expansion, modernization, or diversification projects in priority areas for regional development in the areas covered by the former Superintendence for Development of Amazônia and Superintendence for Development of the Northeast
Investment Opportunities:
The Key Sectors of the National Economy are :
Agriculture which includes sugar cane, coffee, oranges, soya, bananas, walnuts, cashew nuts, corn, pineapples and peppers, beef, poultry, tobacco leaves; mineral ores, iron, and aluminum.
The country is increasingly asserting itself in aeronautics, pharmacy, automobile, iron and steel, and chemical sectors. The Petrogas sector has a large potential and Brazil is the largest market in Latin America for renewable energies.
Moreover, the Brazilian government launched an investment program for infrastructure development. Opportunities exist, notably in the development of airports and more generally in the public-private partnership targeting infrastructure development, as the Projeto Crescer. Thanks to the growth of the middle class, the franchising sector is booming in Brazil.
High Potential Sectors:
Numerous sectors in Brazil offer excellent short term opportunities: agricultural biotechnology, agricultural commodities, crop and livestock, digital technologies, aerospace, chemical products, petrochemicals, and clean energy, oil, and gas extraction, metal extraction, electricity, and gas, commerce, transportation, basic metallurgy, motor vehicles, trailers, semi-trailers, and real estate activities.
Foreign investment is restricted and requires special authorization in the following activities: mineral resource prospecting and mining in border areas, telecommunications, broadcasting companies, and healthcare.
Monopolistic Sectors:
Foreign capital is prohibited in activities relating to nuclear power, mail and telegraph services, and the aerospace industry. Under the provisions of the Constitution, the Federal Government is legally liable for the operation of nuclear services and facilities of any kind and the exercise of the state monopoly on research, extraction, enrichment and reprocessing, industrialization, and trade in nuclear ores and their derivatives.
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Conclusion
Brazil is the fifth most populous country on Earth and accounts for one-third of Latin America's population. It has a gross domestic product of 2.05 trillion dollars which accounts for slightly more than 2.5 percent of the global GDP in 2020. Between 2003 and 2014, Brazil lifted 29 million people out of poverty.
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