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South America / Brazil

Brazil’s pitch for new foreign investment

Ahead of the Brasil Investment Forum, Apex-Brasil’s Roberto Escoto discusses shifting investor priorities post-pandemic and how Brazil’s ability to meet those needs promises to reassert the country’s status as a global FDI destination of choice.

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Brazil has many sites for investment. Curitiba is rated as one of the best cities to live and do business in Brazil. (Image courtesy of Apex-Brasil)

In 2019, FDI inflows to Brazil reached $75bn, up 26% from the previous year.

However, as was the case the world over, the pandemic soon halted momentum. The priority for 2021 is to engender a sustainable, rapid return to growth. Early signs are positive; the Brasilian Central Bank recently reported FDI figures of $17.7bn in the first three months of 2021 – a 40.3% increase on the same period last year.

The Brasil Investment Forum (BIF) – the largest event for foreign investment in Latin America – should provide an opportunity to build upon this success.  Running from 31 May to 1 June in a fully digital format, BIF is expected to attract some 3,000 attendees, providing investors with a unique opportunity 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.

Roberto Escoto, director at Apex-Brasil, the trade and investment promotion agency behind BIF, believes shifting investor priorities, renewed appetite for the right investment opportunities, and the opening of new digital channels of communication, mean this year’s event promises to offer more value to attendees than ever before.

 

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How do you think investor priorities have shifted in the wake of the pandemic?

Global FDI flows dropped by 42% last year and that fall is something we felt very keenly in Brazil. It has led to increased risk aversion, with investors 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. This trend is being accelerated at the government level too, as we have seen in strategic sectors such as health.

However, we believe investors will continue to seek out the right FDI opportunities, with strong, long-term focus linked to the Sustainable Development Goals (SDGs) – especially in infrastructure, sanitation and access to clean water, innovation, renewable energy, mobility, health and education.

Is Brazil well-positioned to benefit from this shift?

Brazil has a very diverse portfolio of opportunities in sectors and areas for investment closely associated with the SDGs – especially infrastructure, where we have a highly ambitious concessions programme this year 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 multiple sectors. In July 2020, for example, the country introduced a basic sanitation legal framework to provide universal water and sewage services for the entire population by 2033. The ambitious aim will be secured by offering major privatisation, concessions and public-private partnerships (PPPs) opportunities for sanitation infrastructure projects all over the country to global investors over the next few years.

And do the fundamentals of Brazil as an FDI destination remain strong?

For international investors, access to markets is crucial. Brazil enjoys a reputation as a competitive partner and as a key part of business production chains in the region. Our proximity to the US, pro-business culture, language skills and negotiable time zones between all the global economic hubs in the US, Europe and Asia amount to a very high value proposition.

If we can take a positive from the past year it would be the greatly increased prominence of developing economies such as Brazil, which absorbed 72% of global FDI in 2020. Our task will be to build on this and stimulate more FDI uptake as we work towards a global economic recovery in 2021 and 2022.

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Roberto Escoto, director at Apex-Brasil. (Image courtesy of Apex-Brasil)

What sectors will drive that uptake?

Brazil is leading the way when it comes to renewable energy. More than 80% of our energy comes from renewables, especially wind and solar. New regulatory frameworks are being adopted to support offshore wind projects, the gas industry and green hydrogen. This includes the federal bill 576/2021 to regulate power generation in maritime areas, an initiative that will greatly support the energy transition and expand renewables in Brazil’s energy matrix, presenting exciting opportunities for energy investors.

Meanwhile, infrastructure continues to be a key 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 2019–20 we held a total of 65 auctions attracting over $97.6bn in projected investments and $19.6bn in concession fees.

Part of our success now is due to scaling up our digital capabilities, including promoting our infrastructure portfolio online. This includes the Invest in Brasil Infrastructure series, which gathered over 3,000 participants across five events in 2020.

Has remaining close to your investor communities been a challenge during the pandemic?

We have sought constant feedback on any challenges they are facing. As a result, we expanded our political advocacy and established greater, more open channels for communicating concerns with government in order to create a more favorable investment climate in Brazil.

We also ramped up our digital capabilities and created an English language hot site of pandemic-related information for foreign investors – later recognised by UNCTAD in its July 2020 report around innovative and proactive measures taken by IPAs worldwide.

There has been significant investment in online communications with investors including a range of webinars on investment opportunities in sectors including infrastructure, oil and gas, agribusiness, renewable energy, research, development and innovation.

Has the experience taught you any valuable lessons around promoting Brazil as an investment destination?

The current format of the Brasil Investment Forum as a fully digital event would have been unthinkable just over a year ago, but it is proof of our abilities to adapt quickly in the interests of our investors and other stakeholders.

Another initiative that is still under way but which we expect will have a major impact is an interactive online platform, where potential investors can find up-to-date and reliable information on investments, business opportunities, projects and potential partners as well as access to our dedicated team of specialised investment analysts, both in Brazil and our regional offices worldwide. This will be a vital resource for our investor communities.

How do you see the make-up of those communities evolving?

 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.

How important is BIF for attracting and engaging with those investor types?

Last year’s event attracted over 1,500 participations, including CEOs, governments and international organisations. With such a healthy mix of public and private representatives the forum has become one of the best opportunities for investors to learn about new business opportunities, hear from a broad range of experts about Brazil’s business environment and, of course, schedule meetings with high-level Brazilian authorities including ministers and state authorities.

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The BIF event in 2020 attracted more than 1,500 participations, including CEOs, governments and international organisations. (Image courtesy of Apex-Brasil)

We have worked tirelessly to make 2021’s event a success and ensure that our investors have access to the best information possible. So far, we have more than 2,000 people registered from almost 90 countries.

What overall message are you hoping BIF will convey to the global investment community?

 There is still work to be done on the road to economic recovery, but by coming together now we can emerge faster and stronger from this crisis.

Brazil remains open for business. 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.

To learn more about the role foreign investors can play in harnessing opportunities in sectors such as agribusiness, energy, infrastructure, innovation and technology,  be sure to register as a virtual attendee for the Brasil Investment Forum.