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Q: Structure, Players in Brazil, Brazil economy ( Answered,   1 Comment )
Subject: Structure, Players in Brazil, Brazil economy
Category: Business and Money
Asked by: jd3-ga
List Price: $200.00
Posted: 09 Sep 2006 04:11 PDT
Expires: 09 Oct 2006 04:11 PDT
Question ID: 763620
What's the structure, who are the important players, corporations,
wealthy families in Brazil's economy.  Include government agencies,
research institutes, universities, associations, political parties,
and of course corporations.  Particularly interested for Ethanol,
BioFuels industry
Subject: Re: Structure, Players in Brazil, Brazil economy
Answered By: crabcakes-ga on 10 Sep 2006 23:24 PDT
Hello JD3,

   ?From 1981 to 2002, there was a huge deceleration in the growth of
capital due to a much lower investment rate. TFP also declined from
1981 to 1993, resuming positive growth between 1994 and 2002.

If one factor has to be isolated, I would say that rapid capital
accumulation was the single most important factor explaining growth.
TFP is also important but it was capital accumulation that led to high
growth from 1930-80. Conversely, it was the low rate of investment
that caused low growth in the 1980s. Despite the resumption of
positive TFP growth since the 1990s, low capital accumulation rates
continue to hinder the recovery of growth.
During the high growth period, three policies shaped the direction of
sustained growth:
?	successful industrialization through import substitution
?	the fostering of manufacturing exports starting in the late 1960s
?	maintaining high levels of public savings to finance investment in
infrastructure, basic industries and industrialization as a whole
Other factors that are essential for resuming sustained growth include:
?	increased investment in basic education
?	higher trade integration into the world economy
?	a lower tax burden 

Please see each link for further information.

   ?Brazilian exports to Latin America increased at a much faster rate
than exports to the United States: for Latin American destinations,
the growth factor was 3.8. Faster growth mirrored economic integration
between Brazil and its Mercosul partners, Argentina, Uruguay and
Paraguay. Thus, by 1992-96 period, 24 percent of Brazilian exports
were absorbed by Latin American countries, while 20 percent of exports
were destined to the United States.?

   ?The economic policies backed by the Fund program, coupled with key
ongoing structural reforms, have seen a remarkable transformation in
Brazil's economic fortunes. The floating exchange rate regime,
introduced in 1999, has undoubtedly helped smooth the adjustment
process. And prudent fiscal policies?including a primary surplus of
4.6% of GDP in 2004?have paved the way for more rapid growth and
falling inflation. Growth accelerated last year to about 5.2% and is
expected to come in at around 3.7% this year, while inflation has
fallen from 12.5% in 2002 to 7.6% at the end of 2004, and is projected
to be at 5.1% by the end of this year.? Please see the link below for
additional information.

   ?The currency depreciated sharply in 2001 and 2002, which
contributed to a dramatic current account adjustment; in 2003 to 2005,
Brazil ran record trade surpluses and recorded its first current
account surpluses since 1992. Productivity gains - particularly in
agriculture - also contributed to the surge in exports, and Brazil in
2005 surpassed the previous year's record export level. While economic
management has been good, there remain important economic
vulnerabilities. The most significant are debt-related: the
government's largely domestic debt increased steadily from 1994 to
2003 - straining government finances - before falling as a percentage
of GDP in 2005, while Brazil's foreign debt (a mix of private and
public debt) is large in relation to Brazil's small (but growing)
export base. Another challenge is maintaining economic growth over a
period of time to generate employment and make the government debt
burden more?

Brazil?s Economic Structure:
   ?With its ample natural resources, Brazil has comparative
advantages in many areas, including agricultural products (coffee,
soybeans, sugar, oranges, tobacco and cocoa); livestock products
(meat, poultry and leather footwear); wood products (pulp, paper,
veneer and plywood); and mineral and metal products (iron, steel and
aluminium). After the second world war the country?s economic
development was based on import substituting industrialisation (ISI),
which was facilitated by the huge domestic market.?

Economic Data

   ?The Development Challenge: With a population of 182 million and
the largest economy in South America, Brazil is a key U.S. partner and
provides a regional leadership role on trade, democracy, environment,
and peacekeeping. Brazil has made progress in consolidating democratic
reforms and establishing relative economic stability after years of
rampant inflation. In 2002, Luís Inácio Lula da Silva, of the Worker's
Party, was elected President with an unprecedented 61% of the popular
vote. Voters supported Lula with the expectation that he would fight
poverty, create jobs, and expand social sector programs. Nearly two
years into his administration, Lula has strengthened the confidence of
international and domestic investors by shoring up Brazil's economy,
running primary budget surplus, and controling inflation. Preliminary
2004 economic figures project a drop in the 2003 inflation rate of
9.3% to 7%, and an increase in the economic growth from 0.5% in 2003
to 5.0%.?

   ?Brazil boasts a number of fine universities. Some of the best
universities in Brazil are public and do not charge tuition. These
include the University of São Paulo (Universidade de São Paulo--USP),
the Campinas State University (Universidade Estadual de
Campinas--Unicamp), the Federal University of Minas Gerais
(Universidade Federal de Minas Gerais--UFMG), the Federal University
of Rio de Janeiro (Universidade Federal do Rio de Janeiro--UFRJ), the
University of Brasília (Universidade de Brasília--UnB). Its first
private higher education institution was the Pontificia Universidade
Católica de São Paulo (PUC-SP), which now is known as one of Brazil's
best institutions, along with Pontifical Catholic University of Rio de
Janeiro (Pontif?cia Universidade Católica do Rio de Janeiro--PUC-RJ).
PUC-RJ has more than 100 agreements with U.S. institutions for study
abroad programs.

Brazil is the world's ninth largest economy and fifth most populous
nation. The country's economy depends on its large and well-developed
agricultural sector as well as the mining, manufacturing, and service
industries. Its agricultural products include coffee, soybeans, wheat,
rice corn, sugarcane, cocoa, citrus, and beef while its industrial
products include textiles, shoes, chemicals, cement, lumber, ore,
iron, tin, steel, aircraft, motor vehicles and parts, and other
machines. Brazil's economy is strengthened by its extensive natural
resources and sizable labor pool. As such, it is a major player in
Mercosur, a trading zone composed of Brazil, Argentina, Uruguay, and

   ?The Seminar of Business, Investment and Arab Culture, which took
place yesterday, August 29, in Campinas, in the interior of the
southeastern Brazilian state of São Paulo, attracted the attention of
professors and students in the region and generated interest in taking
the Arab question into universities.
"The idea is to work together with universities in the medium and long
term," stated the superintendent of Jerusalem Institute, Ali El
Khatib, one of the organizers of the event.

The seminar received around 200 people, most Foreign Trade,
Journalism, Public Relations and International Relations students.
According to El Khatib, after the event, some students and professors
from the Paulista University of Campinas (Unip) and Paulínia College
(FACP) told him about their interest in proceeding with the work at
their schools.

"Other universities of Campinas are also showing interest in the
seminar on business and Arab culture," stated El Khatib, referring to
Campinas College (Facamp) and the Pontifical Catholic University of
Campinas (PUC), among others.?

Pgs. 10-11 show exports and imports, Brazil/US

Brazilian party politics and implications for President Luiz Inacio
Lula da Silva?s strategy for
??implications of a political crisis resulting from the immediate
impact of the recent corruption
scandal and the possibility of presidential impeachment, and its
effect on the government?s
reform agenda;
??implications of Brazil?s foreign policy priorities, including its
efforts to play a leadership role
within the region and among developing countries in international fora
such as the WTO;
??the attractiveness of Brazil to foreign investors; and
??prospects for the 2006 legislative and presidential elections.

   ?The government has secured congressional approval for limited
pension reform. However, there still exist many other serious
obstacles to long-term investment and economic growth, including a
convoluted tax system, barriers to foreign investment in some sectors,
government management of most of the oil and electricity sector and a
significant part of the banking system, a weak judiciary, and a
complicated regulatory maze. Brazil's fiscal burden of government
score is 0.2 point better this year, and its monetary policy score is
1 point better. As a result, Brazil's overall score is 0.12 point
better this year.?

Trade Policy - As a member of the Southern Cone Common Market
(MERCOSUR), Brazil adheres to a common external tariff that ranges
from zero to 25 percent. The World Bank reports that Brazil's weighted
average tariff rate in 2004 was 8 percent, down from the 9.9 percent
reported for 2002 in the 2005 Index.?

Wages and Prices
The market determines most prices in Brazil, with some exceptions.
According to the Economist Intelligence Unit, "Some public goods and
services supplied by state-owned enterprises or by local governments
remain under government control. Although many public services and
infrastructure investments?were either privatized or transferred to
private management through public concessions, the federal government
still oversees tariffs and prices through regulatory agencies for
these sectors." A mandated minimum wage is adjusted by the government
each year.?

Regulation - ?Brazil's regulatory structure is burdensome and not
entirely transparent. "A study by Brazil's small-business
association," reports The Wall Street Journal, "found that 70% of
entrepreneurs who try to open a business legally never conclude a
process that requires about 100 different documents." According to the
Economist Intelligence Unit, "Congress approved new legislation to
regulate bankruptcies in July 2004. The new law, similar to Chapter 11
rules in the United States, will reduce filing time and give creditors
some priority when restructuring and collecting on business debts."
The labor market is highly rigid.?

   ?The EU is Brazil?s biggest trade, investment and cooperation
partner, with total bilateral trade of around ?35 bn in 2004,
absorbing around a quarter of Brazil?s exports. Brazil is an important
destination of EU investment, whose total stock in the country is
close to ?80 bn. Brazil plays a leading role in regional integration
both in Mercosur and South America, and is therefore a key partner in
the current negotiations for an EU-Mercosur bi-regional association

   ?With a GDP of US $508.6 billion in 1993, the Brazilian economy is
dynamic and diversified. In 1994, industry was responsible for 38.1
percent of economic output, agriculture for 10.0 percent, and services
accounted for 51.9 percent. The dynamism of the country's economy is
reflected in, among other areas, foreign trade and in the performance
of exports. From 1988 to 1992 Brazilian exports have earned, on
average, in excess of US $33 billion. Over 60 percent of these exports
are manufactured goods. The trade surplus reached US $13 billion in
1993. The European Community absorbs almost 26 percent of Brazilian
exports, North America around 22 percent (the U.S. is the largest
individual trading partner), Asia absorbs 16 percent, MERCOSUL 14
percent, rest of ALADI 10 percent, Middle East 4 percent, and the
remaining exports are distributed over a variety of smaller markets.?

?Electricity-capacity: 57.64 million kW (1995) 
Electricity-production: 264.895 billion kWh (1995) 
note: imported about 36.95 billion kWh of electricity from Paraguay 
Some 92 percent of electricity is generated by hydroelectric facilities. 
Electricity-consumption per capita: 1,878 kWh (1995) 
Agriculture-products: coffee, soybeans, wheat, rice, corn, sugarcane,
cocoa, citrus; beef
total value: $53 billion (f.o.b., 1997)

   ?In Brazil the role of government is much more intrusive than in
US. This is not only a matter of taxation, but also in legal
organization and in the regulatory role. In small and medium
businesses, this aspect is less evident. In large scale foreign
investment situations, a close personal official relationship is
fundamental. Lobbying by large corporations and trade groups is even
more aggressive than in US. Government contracts are often awarded
according to relationships and connections rather than pure technical
or financial merit. This is a result of the paternalistic, nepotistic
culture that has existed for hundreds of years. Examples of this are
the Minister of Finance, Chico Lopes, who was putting public money in
his private pocket, or Fernando Collor, the ex-President, who wanted a
cut of everything.?

?The problem in Brazil is that the middle class and the tax payers do
not effective challenge the controlling interests. Now a quick look at
the main special interest groups:
?	Government itself, mainly elected officials, public employees and
state corporations
?	Large financials interests, including banks, communications
conglomerates and agricultural landholders. The large industrial
groups such as FIESP, and traditional manufacturing interests are lost
a great deal of influence in the last 10 years.
?	Political parties, that favor social programs without accountability
or any corresponding source of revenue. These groups, mainly but not
exclusively from the left, stand in the way of any rational reforms
that could begin to fix some of the structural problems.

   ?Is government interference in state-owned companies like Petrobras
and regulatory bodies in areas like telecommunications, electrical
energy, mining etc. a problem?

Goldman: This government has undergone a learning process and there
has been less interference than when it came into office. The
government has no money to pay for the large investments needed in
sectors like electrical energy and knows that regulatory stability is
essential to attract private investors. As a result, it has become
very pragmatic. One of the reasons why the outlook for the electrical
energy sector is extremely positive is because the regulatory
framework has become more stable. The presidents of ANEEL and ANATEL,
for example, have spoken publicly about the need to respect contracts.

Why should a foreigner invest in Brazilian equities or ADRs?
Goldman: There are various reasons. The process of reforms which is
still in place will create value for Brazilian companies. The economy
should accelerate faster than has been observed in the last 10 years
or so. Brazilian management has a very good track record and the
country is highly competitive in sectors such as steel, mining, pulp
and paper and banks. Corporate governance practices are being improved
and, finally, the Brazilian stock market is one of the most liquid
among emerging markets.?,en/ 

Visit this page. Click on the link labeled ?KEY ASPECTS OF BRAZILIAN
ECONOMY?. On that page will be two links to documents that provide in
depth aspects of the  Brazilian economy.

Brazil and the IMF ? numerous resources on Brazil?s economy are found on this site.

A slide show on biofuels in Brazil

?SAO PAULO, Brazil - Antonio Castro, a 25-year-old physiotherapist, is
feeling the pinch. Gasoline prices in Brazil recently hit $4 a gallon.
Castro is not worried.

Last weekend he and his girlfriend, Daniela Fausto, went shopping for
a new "flex-fuel" car able to run on gasoline, much cheaper alcohol,
or any mixture of the two.

Flex-fuel cars are all the rage in Brazil where they have captured the
new car market since they were introduced in March 2003.?

?Brazil vs. United States:
BRAZIL: The world's largest producer of ethanol, produced from sugar
cane. No regular gasoline sold at the pump. All gasoline is blended
with at least 24 percent to 25 percent ethanol. Almost all fueling
stations in Brazil, 29,000 out of 31,000, also offer the choice of 100
percent ethanol. Some stations also offer natural gas.?

   ?On June 19, 2003, U.S. Department of Energy Secretary Spencer
Abraham and Brazilian Mines and Energy Secretary Dilma Rousseff signed
a Memorandum of Understanding to conduct a Ministerial Summit on
energy issues in Brazil. Pursuit of joint objectives in clean energy
and biofuels were specifically addressed in the MOU.

   In support of this collaboration, DOE funded SSEB to conduct a
United States-Brazil Biodiesel Pilot Project as a bilateral effort to
enhance the prospects for success in developing biodiesel use in
Brazil. The purpose of this project is to promote the
commercialization of biodiesel and bioenergy production, technologies
and usage in Brazil. The project consists of three primary components:
Policy and Program Development; Feasibility Study and Technical
Analysis; and bioenergy meeting design and execution to meet the U.S.
Department of Energy?s goals. The focus of these activities is to
provide market development assistance to the Brazilian biodiesel
market by assisting with an evaluation of the economic viability of
producing biodiesel.?

   ?That's true in Brazil, where nearly 4 million vehicles run on
ethanol alone, and 25 percent of the regular fuel supply is
plant-derived ? and in cities like Montreal, Canada, and Graz,
Austria, where municipal buses are powered by biodiesel created from
farm-grown oils. In the United States, meanwhile, ethanol will soon
pass exports as the second-leading market for American-grown corn,
trailing only animal feed. 2

The rising interest in biofuels is good news for rural people in
agriculture-based areas, who generally earn less than their
counterparts in the city and who would benefit most from a greater
demand for corn, soybeans, sugarcane and a number of other crops that
serve as the raw material for these green energy sources.?

?Can the emerging biofuels industry help revitalize the countryside?
While alternative fuels such as ethanol and biodiesel (a diesel-oil
substitute made from natural oils or fats and alcohol) still account
for just a small percentage of the world's energy use, there's
evidence that biofuels can promote rural economic development.

Brazil, a world leader in the development and use of biofuels,
supports approximately 700,000 agricultural sector jobs in the ethanol
industry. The use of ethanol and other biofuels in Brazil has
displaced oil imports worth about $120 billion.?


   ?Based on data from the Economist Intelligence Unit, the government
consumed 18.4 percent of GDP in 2004. The government remains a
significant presence in the economy. The EIU reports that the
government owns Petrobras, the oil giant; Eletrobras, the state energy
company that controls a number of generation companies; Banco do
Brasil, the largest retail bank in Latin America; and a national
development bank.?

President Luiz Inacio Lula da Silva 

 ?Though hailed by his supporters as a working-class hero, business
leaders and investors have traditionally been wary of Lula. In his
fourth attempt to win the presidency he toned down his rhetoric and
emphasised that he and his party had moved closer to the political
centre. He also pledged to meet targets set by the International
Monetary Fund.

Lula has overseen a stabilisation of the economy, surprising some of
his critics. He implemented pension reforms in an effort to reduce a
huge deficit, and pushed through a modest increase in the minumum
wage. But he has had to contend with a surge of land invasions by
activists frustrated at what they see as the slow pace of agrarian

In 2005 his popularity was hit by claims of corruption in the ruling
party, focusing on a cash-for-votes scheme in Congress. The president
made a televised apology and said he had known nothing about the
alleged corruption.?

   20,000 Rich Families Rule Brazil, But the Poorest Elect the President
?According to polls, Brazilian President Luiz Inácio Lula da Silva has
emerged unscathed from the political crisis of corruption his
government suffered in 2005. With his popularity on the rise, it is
likely he will be reelected for another four years in October.
Nevertheless, there are indications that important changes have taken
place that will limit his possibilities.
The polls released in January leave no room for doubt: Lula has
recovered a good portion of the popularity he lost in 2005 and is in
good condition for a victory in the upcoming election in October, or
at the latest, November when the count is finalized.

According to all projections, Lula will defeat Geraldo Alckmin,
governor of the state of São Paulo, who is running on the opposing
Social Democratic Party (PSDB for its Portuguese initials) ticket.

The nature of Lula's social support has been changing over the past
three years and three months of his tenure in office. The traditional
foundations of support on which the Workers Party (PT) rested came
from industrial laborers and a certain sector of the urban middle
class with university education.
Today, however, the profile has changed, to the point where the sole
explanation for Lula's rise lies in the assistance program "Bolsa
Família," (family welfare) created in October of 2003.?

Lula da Silva is included in TIME magazine's 100 most influential people's_100_most_influential_people_of_2004.htm

Cardoso, Fernando Henrique 
Influential scholar of underdevelopment, elected President of Brazil
in 1994. PhD, University of São Paulo, 1961. Long-time professor of
political science at University of Sao Paulo, now emeritus; member of
the Scientific Council of CEBRAP (Brazilian Center for Analysis and
Planning). Known among academics for Dependency Theory, influenced by
Marxist concepts, attributing Latin American underdevelopment to
dependence on foreign capital and political influence. Started
political career in 1970s; co-founder of two political parties;
senator, 1988-92?

Wealthy/ Influential Families

Paulo Maluf
  ?Paulo Maluf is a Arab Brazilian politician with a career spanning
over four decades and many functions, including state governorship
(São Paulo), presidential candidacy and mayor of the city of São
Paulo. He has been plagued throughout his political career with
substantial allegations of corruption, but nevertheless, has only been
convicted once, in 2001. Due to the nature of the Brazilian judicial
system, only final convictions (without possibilities of appeal) are
considered. He is currently a leader of Progressive Party of Brazil
(PP), heir of the old National Renewal Alliance Party (ARENA).?

?In early September 2005, Paulo Maluf and his son Flávio Maluf were
temporarily arrested by the Brazilian Federal police, under the charge
of intimidating witnesses of an ongoing investigation. They were only
incarcerated for a few weeks.
So notorious is Maluf's reputation that in Brazil the verb "To Maluf"
("Malufar" in Portuguese) was created, meaning "to steal public
money". This verb is also sometimes used outside Brazil, with one
example being the French newspaper "Le Monde".? 

Abilio Diniz
?The CASINO group and the family of Abilio Diniz have signed a
partnership agreement whereby the CASINO group, until now a minority
shareholder, will have joint control, with the family of Abilio Diniz,
of CBD, Brazil?s leading food retail group.

The total cash investment net of certain immediate tax savings related
to the execution of the transaction for the CASINO group amounts to ?
407m. This translates into an implied enterprise value for CBD of ?
2.6bn, i.e. 0.6x 2005 net sales and 7.8x 2005 EBITDA (See details in
Appendix 1).?

   ?Mr. Abilio dos Santos Diniz is the Chairman of our board of
directors. Mr. Abilio Diniz was one of the founders of São Paulo's
supermarket association, and was also a founder of ABRAS. He is a
former member of the Brazilian National Monetary Council. Mr. Abilio
Diniz holds a bachelor's degree in Business Administration from
Fundação Getúlio Vargas and has attended Columbia University in New
York and the University of Ohio at Dayton. Mr. Abilio Diniz is the son
of Mr. Valentim dos Santos Diniz.?

   ?As a consolidation within the controlling group of CBD, Abilio
Diniz and Casino will contribute enough common shares of CBD to a
Special Purpose Company (?Holding Company?) so as to allow the Holding
Company to become its new direct controlling shareholder. The voting
capital stock of the Holding Company shall be divided into a 50% stake
for Casino and a 50% stake for Abilio Diniz.

Therefore, both Casino and Abilio Diniz shall exercise a co-control
over the Holding Company, and consequently of CBD. In accordance with
applicable Brazilian laws and regulations, this consolidation will not
yield any mandatory offer to the minority shareholders of CBD, either
owner of common or preferred shares of CBD.?

Sergio Goldman
?Sergio Goldman, equity strategist at Unibanco, says the Brazilian
stock market will rise by at least 30% in 2006 as the economy
continues to accelerate.
He also believes the current economic policy will continue, regardless
of who wins the next presidential election and does not exclude the
prospect of President Luiz Inácio Lula da Silva standing for

Goldman also expects interest rates to continue their downward trend
but to remain above 10% in real terms, and the real to depreciate
gradually toward R$2.40/US$ by the end of 2006.?,en/

   ?But, lo and behold, it seems that Brazil may have turned a corner.
The increase in inflation that occurred last fall looks like a blip.
The government estimates it to be 6% this year, although Merrill Lynch
guesses it will be a little over 7% -- either way, not bad for Brazil.
Exports have finally picked up, a long-awaited result of the January
1999 real devaluation, and the current account deficit is falling as a
percentage of GDP, according to Sergio Goldman, Brazil equity
strategist at Paribas, who is based in Sao Paulo. Industrial
production has improved monthly. In addition, the government's fiscal
picture is improving, and it is within targets set by the
International Monetary Fund. Estimates for GDP growth this year are in
the 3% range.

Despite the sound statistics and the bullishness of the fund managers
with whom I spoke, Goldman thinks many investors are holding off
putting their money into Brazil. "What is postponing investors is the
international environment," he says, alluding to the possibility of a
major stock market setback in the U.S. However, that hesitation means
now is a "good time to get in," he says, noting the Brazilian market
is down around 8% the last few days.? 

Antonio Carlos Magalhaes
?Ex-allies of the military rulers, politicians like José Sarney,
Collor de Melo, Antônio Carlos Magalhães and Inocêncio de Oliveira,
became the senior partners in the administration of the Brazilian
What was involved was a type of "comprador bourgeoisie" that served as
an intermediary to big capital in the division of the spoils that
passed through the state's hands.?

President of the Central Bank, Henrique Meirelles
 ?This week, Veja, considered to be a more responsible magazine,
amplified on the accusations against Meirelles and added some dirt
about possible real estate holdings that had not been declared on his
statement of assets.
My feeling is that Meirelles will not easily surrender to pressure.
Meirelles is independently wealthy and makes no secret of his
political aspirations.?

   ?The minutes indicate that the central bank board, which is led by
bank President Henrique Meirelles, will likely ratchet down the pace
of cuts next month and opt for a quarter-point reduction, said Paulo
Leme, managing director for emerging markets at Goldman Sachs Group

   ?Brazil's Central Bank's Monetary Policy Committee (Copom) decided,
yesterday (16), to raise the annualized benchmark interest rate, the
Selic, from 18.75% to 19.25%. The 0.5% increase corresponded to what
financial analysts and institutions were expecting. The Copom decision
was unanimous.
Last year the Selic remained stable for various months. In September,
the Central Bank resolved to begin raising the rate, the rationale
being the need to rein in the inflationary process. Successive hikes
since then have elevated annualized interest rates by 2.75%.
Brazil's two major workers' unions were prompt to lament the decision
to raise the Selic.

   ?The president of Brazil's Central Bank (BC), Henrique Meirelles,
calling 2005 a year of adjustments, admitted that growth last year was
below expectations. But, speaking to the American Chamber of Commerce
in Rio de Janeiro, he said the prospects for 2006 were very good.

Even with sluggish performance in 2005, it was above 2004 and better
than most emerging countries, Meirelles pointed out.
He said the Central Bank was doing its part by keeping the country's
economy sound with low inflation that was being kept within strict
limits. Meirelles emphasized that countries do not grow with high

   ??The basic rate acts to cool off the economy in a precise way, and
it prevents an upturn in inflation, as a result. However,
public-sector bonds are tied to this rate, which is known as SELIC.
So, every time the government raises it, it is also increasing its own
spending on bonds for internal public debt,? explains Tharcisio
Bierrenbach de Souza Santos, director of the MBA program at the
Armando Alvares Penteado Foundation.
Bierrenbach sees this as a systemic problem. ?The higher the interest
rate rises, the bigger the hole it produces. As a result, the larger
the need becomes for producing a surplus in the primary account. This
primary surplus is achieved at the cost of abandoning investments or
increasing the tax burden ? or even by doing both.?

?This proposal for a zero public-sector deficit is an attempt to
improve the market?s perception about the government?s ability to
fulfill its financial obligations. The idea would lead to a decline in
interest rates, according to its defenders, who are led by federal
deputy Antonio Delfim Netto, a former finance minister under Brazil?s
military governments. This goal would be achieved within a period of
four to ten years. Nevertheless, for this to become a reality, the
government would have to make a greater fiscal effort. In other words,
it would have to minimize its spending, which would affect investments
in some essential sectors such as infrastructure and social services.?

Roberto Rodrigues, Minister of Agriculture
?"Renewable fuel has been a fantastic solution for us," Brazil's
minister of agriculture, Roberto Rodrigues, said in a recent interview
in São Paulo, the capital of São Paulo State, which accounts for 60
percent of sugar production in Brazil. "And it offers a way out of the
fossil fuel trap for others as well."

   ?Obtaining funds to alleviate Brazil's farming sector of its
growing indebtness has turned into an uphill race because of the
political crisis, admitted this week Brazilian Agriculture Minister
Roberto Rodrigues.

Brazil's soybean sector in the south of the country has been
particularly hit by drought and the strong Brazilian currency real,
which means higher costs in US dollars and smaller profit margins.

   In an interview published in the financial magazine "Valor
Econômico", Mr. Rodrigues reveals that the "(political) crisis is
becoming more and more serious on the minute", which significantly
hampers normal business.
Political analysts argue that the ever growing difficulties faced by
President Lula da Silva administration blocked by allegations of a
corruption scheme of money for votes and illegal funding of political
campaigns, recall the 1992 crisis which ended with the impeachment and
Congressional ousting of then president Collor de Mello.?

?Thursday, May 11, 2006 - 
SAO PAULO, Brazil - Brazil is considering tax reductions on biodiesel
made from soybean oil in the center-west to ease the crisis in the
farm sector, Agriculture Minister Roberto Rodrigues said on Wednesday.

      "We are working also -- because of the agricultural crisis -- on
the issue of opening fiscal (breaks) for the soybean -producer in the
center-west to produce biodiesel,' Rodrigues said at the First
Interamerican Encounter on Biodiesel.

Producers in the center-west, Brazils main soy growing region, have
been plagued with rising costs from petroleum diesel and freight as
welt as from agrochemicals and fertilizers.

At the same time, Brazil's real has gained 35 percent against the
dollar over the past two years, squeezing margins in most regions of
the No. 1 soybean state Mato Grosso in the heart of the centerwest.
Producers are in their third week of protests. They are blocking main
routes on which soybeans are transported to ports and plan to march in
Brasilia on May 16 to put demands to the government.?

Former Finance Minister Antonio Palocci
?During the last two and a half years, the Monetary Policy Committee
made up of the president and seven directors of the Central Bank has
been an endless source of frustration for the productive sector by
fixing higher than expected interest rates month after month, thereby
hindering investments that could boost economic activity.

The current management of the Central Bank started out in early 2003
by raising the Selic benchmark interest rate to 26.5 percent annually,
as a means of fighting rising inflation that had reached 12.5 percent
in 2002 and the economic turbulence caused by the election of a
left-wing national government for the first time ever in Brazil.?

?THE policy is set by the president, Luiz Inácio Lula da Silva, but
its main executor and most trenchant defender since January 2003 has
been Antonio Palocci, the finance minister. Now Mr Palocci is gone. He
fell on March 27th because his office was party to the illegal
disclosure of payments to a bank account belonging to a witness
against him in a corruption case. His successor, Guido Mantega,
promises to steer the same economic course. But there are doubts about
his commitment to do so.
Mr Palocci backed cautious fiscal and monetary policies, which have
maintained financial stability but not yet brought sustained growth
(see chart). His departure makes it less likely that Lula will enact
ambitious reforms if he wins a second term in an election next
October. After the sacking, the real fell by 2.7% against the dollar
and the risk premium on Brazil's bonds rose 0.6%. That may be an

?The banking system in Brazil has been improving over the past few
years; however, more than 50% of the Brazilian population has no means
to ever get a bank loan, neither open a bank account. The first
problem is that millions of Brazilians have low income. The second
problem lies on the credit bureau, which has a deficiency on tracking
one's credit history. Most Brazilians prefer to use the direct
financing system, in other words, a store finances one's purchase,
breaking it in small monthly payments, and charging very high
interests. If the individual do not pay his or her bills, then the
store can confiscate the product, and report his or her name to the
credit bureau. The credit bureau tried to maintain an updated data;
however, by law if an individual has been with bad credit over a
period of six years, he or she can apply for exoneration of credit, in
other words, he or she will have his or her credit clear out without
any expenses. Such process can prevent commercial banks to rely on
accurate data from the credit bureau, and banks can have a hard time
to evaluate the risks of loaning money to an individual. New laws and
efficiency on the credit bureau will have to happen before Brazilian
and banks can have a better relationship.?
?Brazilian legislators are far from calling themselves effective in
work. Brazilian economy still has non-satisfactory fluctuation, more
than 40% of the population lives in total poverty, infant mortality is
high, transportation and educational system have big issues to be
solved, and crime and corruption are a huge problem. After Fernando
Henrique Cardoso, former president, first year in office, several
denounces came about some Brazilian legislators being involved in
scheme and corruption scandals. Such news did not surprise most
Brazilians, except for the fact that someone had the courage to speak
Daily, such scandals are increasing and openly denounced in Brazilian
newspapers. Brazilians are still waiting to see which, those who had
abused of their positions for personal profit, will go to jail. Too
many legislators are involved in these scandals; it is logical that
political effectiveness is in absence.?

?Much of the arable land is controlled by a handful of wealthy
families, a situation which the Movement of Landless Rural Workers
(MST) seeks to redress by demanding land redistribution. It uses
direct protest action and land occupation in its quest.?

Joseph & Moise Safra
?Brothers of the late banking billionaire Edmond Safra created their
own banking group in Brazil. Banco Safra is the country's
eleventh-largest bank, and has branched out to Europe. A mixed track
record for the Safra brothers. Brazilian wireless telecom BCP, a joint
venture with BellSouth, defaulted on its $1.6 billion of debt last
year. Cellcom, a similar investment in Israel, is faring much better.?

Aloysio de Andrade Faria
This savvy banker sold his Banco Real to Dutch bank ABN Amro in 1998
for $2.1 billion. Minority shareholders sued, hoping to snare a piece
of Faria's stake, but reportedly lost their case before Brazil's
supreme court in October 2005. Faria kept some of Banco Real's assets
and transformed them into Banco Alfa, now Brazil's 18th largest bank
with nearly $4 billion in assets. He also owns some 12,000 acres of
farmland and a company reported to be Latin America's largest palm oil

Jorge Paulo Lemann
?His billions from beer keep growing. While at Banco Garantia, the
Brazilian investment bank that Lemann founded in 1971, he and his
partners bought control of a Brazilian brewery that eventually became
AmBev. It merged with Interbrew of the Netherlands in 2004. The stock
of the combined firm, InBev, soared 40% over the past year?

Antonio Ermirio de Moraes & family
?Chairs family-owned conglomerate $6.9 billion (2004 sales) Grupo
Votorantim, one of Brazil's largest, operating in aluminum, pulp and
paper, cement and orange juice.?

Farmanguinhos head Eduardo Costa hopes to ramp up production of
antiretroviral drugs at the company's new high-tech plant.


Brazil?s Top Companies

?The CNI System includes the National Industrial Training Service
(SENAI), the Industrial Social Service (SESI), and the Euvaldo Lodi
Institute (IEL). It performs a role similar to that of European
chambers of commerce in terms of providing excellence in occupational
training, offering infrastructure and developing social and
educational services.
The assumption of responsibility by the CNI System for occupational
training and support for the development of human resources,
viabilized through SENAI, SESI and IEL, provides a complex support
structure for the Country's industrial development.?

   ?The National Confederation of Industry (Confederação Nacional da
Indústria - CNI) was established on August 12, 1938 as the chief
institutional representative of Brazilian industry. The CNI
co-ordinates a system comprising 27 Federations of Industry which
represent all of the Country's States and the Federal District -
counting with a membership of some 1,016 employers' unions - and
oversees the National Industrial Training Service (SENAI), the
Industrial Social Service (SESI), and the Euvaldo Lodi Institute

The institution was created in response to the need to consolidate
Brazilian industrial facilities, a lengthy process spanning from the
1930`s to the late 70`s. Over  the years the CNI has concentrated on
the formulation of policies leading to the establishment of an
integrated and diversified industrial structure. As consolidation was
accomplished, the institution's focus since the early '90s has shifted
to improving the competitiveness of Brazilian industry and integrating
it to the world economy.?

Other Representation Agencies in Brasil 
?	American Chamber of Commerce 
?	Brazil Plastics on the Internet 
?	Brazilian Association of Access Providers (ABRANET) 
?	Brazilian Association of Fine Chemical, Biotechnology and
Specialties Industries(ABIFINA)
?	Brazilian Association of Foundry Industries (ABIFA) 
?	Brazilian Electrical and Electronics Industry Association (ABINEE) 
?	Brazilian Pulp and Paper Association (ANFPC) 
?	National Association of Automobile Manufacturers (ANFAVEA) 
?	National SEBRAE 
?	State Data Analysis System Foundation (SEADE) 
?	Transportation National Confederation (CNT) 

?The MERCOSUR is indeed a socioeconomic experiment in rapid
evolutionary change, with a regional common market in South America
expected to be formed by 2006. Since 1991 the regional trade tripled
in monetary value. Before the Asunción Treaty, it was worth US$ 3.6
billion. In 1994, the MERCOSUR trade with Brazil alone amounted to US$
10.5 billion. Regional trade is bound to grow in the future. The
growth potential of trade among the MERCOSUR member countries is vast,
not only in the traditional area of product trade, but increasingly in
the area of services, technology, investments and human resources. The
trade among Argentina, Brazil, Paragu ay and Uruguay has grown
significantly. In 1987, the imports and exports among the four
countries totaled US$ 2.7 billion. In 1994 this was close to US$ 12
billion, and is expected to double by 2000.?

   ?As a leader in the Common Market of the South - Mercosur - which
has also the participation of Argentina, Paraguay and Uruguay - Brazil
is committed to the creation of the Free Trade Zone for Americas
(FTAA). Before this goal is achieved (it is being foreseen to begin
from 2005 on), Mercosur is enlarging its influence with neighbors
countries and has already agreements with Chile, Bolivia and is now
dealing with Colombia, Venezuela and Peru.?

Mercosur Management and Companies

?By the end of 2006, two offices of the Venezuelan Guayana Corporation
(CVG) will open in China and Brazil, CVG International CEO Ana María
González reported.

CVG fosters investments and international purchases of basic
industries. As instructed by the National Government, it also meets
the requirements of local governments, mayoralties, ministries and
associate entities, official news agency ABN reported.?

   ?Brasilia, 10 (Prensa Latina) Brazil requested Portugal to support
an agreement between the Southern Common Market and European Union.
The issue topped the agenda of the meeting between Brazilian President
Luiz Inacio Lula da Silva and Portuguese Prime Minister Jose Socrates,
at the Planalto Palace (executive headquarters) in Brasilia on
Lula said he believed pragmatism and flexibility will ensure that both
parties reach an interregional partnership before 2006, according to
state-run Agencia Brasil news agency.

He vehemently criticized the lack of political will of wealthy nations
to successfully close the World Trade Organization-sponsored Round of
Doha talks, and ratified his country s endeavors for an agreement.
Jose Socrates highly praised economic stability in Brazil and said
Portuguese investors were satisfied and keen on investing there.?

Oil Companies of Brazil

Brazil Promotes Ethanol for the World
?Brazilian companies from the sugar and alcohol sectors are getting
ready to enter the foreign market. They are about 70 companies who are
going to participate, in one month's time, in a project for
preparation of exports.
The project is promoted by the Brazilian Export and Investment
Promotion Agency (Apex) and by the Agency for Political and Economic
Development of Piracicaba (Aderp). The companies will be from the
cities of Sertãozinho, Piracicaba and Ribeirão Preto.
"We must act fast to remain in control of this market. We have
technology and capacity to lead the process," stated Apex president
Juan Quirós, in a statement disclosed by the agency.
The objective of the project is to identify potential consumer
markets, attract foreign investment and strengthen the Brazilian image
as a producer in the sector.?

   ?On October 30, 2002, Brazil launched the Probiodiesel Program,
with Portaria MCT Number 702, Directive #702 of the Ministry of
Science and Technology (MCT). The program aims to develop technology
for the production, industrialization, and use of biodiesel, including
its use in mixtures, with diesel using pure and residual vegetable
oils. According to the legislation, Brazil wants to reduce its
dependence on diesel imports, as it has successfully done with
petroleum. Although Brazilian consumption of petroleum has increased,
imports have declined due to growing domestic production and use of
ethanol. While few vehicles in Brazil operate on 100 percent alcohol
fuel, all Brazilian gasoline requires 25 percent alcohol content,
which considerably reduces petroleum requirements. However, the
situation with biodiesel is quite different. Consumption and imports
of mineral diesel have been rising rapidly, and the Brazilian
government is concerned with the growing dependence on imports.?

Brazil Plans to Create 9 Federal Universities and 41 Campuses 	 
 Written by Carolina Pimentel    
Thursday, 29 December 2005 
   Brazil expects to have 700,000 more students enrolled in higher
education in 2007. This estimate was announced by the minister of
Education, Fernando Haddad, during a ceremony to sign agreements for
the construction of university centers in 14 Brazilian states.
Brazilian President Luiz Inácio Lula da Silva was present at the

The initiative is part of the Expansion program, which intends to
create nine federal universities and 41 university campuses throughout
Brazil. Through this program, the Minister declared, 125,000 students
are expected to enter the federal higher education system.


?The domestic natural gas market in Brazil has grown significantly in
recent years. Demand has expanded at annual rates of around 15 percent
over the last five years, and now totals about 48 million cubic metres
per day. Distribution networks have also expanded quite rapidly, at
about 18 percent per year between 2000 and 2005 ? from 5.6 to 13
thousand kilometres covering various states. At the same time, there?s
been a boom in conversions of motor vehicles to run on natural gas
(NGVs), from less than 150 thousand vehicles nationwide in 2000 to
over a million by the end of 2005. The number of industrial users of
natural gas is also growing continuously, and an extensive network of
gas-powered thermoelectric power plants has been installed, with a
total capacity of 9.1 gigawatts according to ANEEL, the National
Electrical Energy Agency.
The sustained development of this market will essentially depend on a
significant expansion of supplies, domestic as well as through
imports. Further growth will also demand heavy investments, especially
to expand the pipeline network which has been practically stagnated
since the construction of the Brazil-Bolivia pipeline. In fact, there
are already serious problems in order to meet current demand in
certain regions of Brazil.?

   ?PETROBRAS, Brazil's state-run oil company, discovered 50 million
barrels of recoverable crude in Espirito Santo state. The company also
raised its stake in natural gas distributor CEG-RIO to 43% from 29%
for US$16.5 million.?

   ?Petrobras, short for Petróleo Brasileiro S.A., is a
government-owned Brazilian oil company headquartered in Rio de
Janeiro. The company was founded in 1953 mainly due to the efforts of
the Brazilian President Getúlio Vargas. While the company ceased to be
Brazil's oil monopoly in the late 1990s, it remains a significant oil
producer, with output of more than 2 million barrels of oil equivalent
per day, as well as a major distributor of oil products. The company
also owns oil refineries and oil tankers. Petrobras is renowned for
its leadership in development of advanced technology from deepwater
and ultra-deep water oil production. 55.7% of Petrobras' Commun Shares
(with vote right) is owned by the Brazilian government [1], however
privately held portions are traded on Bovespa, where it is part of the
Ibovespa index.?


?Lilly Brazil Health and Citizenship Day 2004 
In November 2004, Lilly Brazil hosted its third Lilly Health and
Citizenship Day at a local public school near the company?s offices in
São Paulo. We provided a broad range of health-related services and
information throughout the day, including lectures on diabetes, oral
hygiene, breast cancer, and sexually transmitted diseases; blood
pressure and glucose screenings; and first aid training. In addition,
partner organizations such as the police and fire departments,
government election office, public library, and even a hairdressing
school participated in the event and contributed their services. The
all-day event was a great success, with 4,000 community members in
attendance and the full participation of 150 Lilly volunteers.?

   One example of negative and positive segmentation is the terms in
the new FTAs pertaining to patented drugs. First, they limit or
eliminate existing terms and practices that allow patent drugs at
lower prices to be exported to the U.S. market or allow the trading
partner to import cheaper versions from countries like India and
Brazil that produce high-quality drugs at low cost. Besides
this new international ring of legal barriers, the new round of FTAs
require countries to alter their price-setting boards for greater
participation by drug companies. Third, they extend protections from
normal price competition beyond the 20-year patents, ?a period so long
that few economists of repute can be found who would call it
efficient??(Bhagwati 2004:184). This forces trading partners to charge
their own patients and health care systems higher prices for several
years longer.?

Pharmaceutical Industry?s Contribution to Brazil

Automotive Industry

   ?Archer Daniels Midland Company announced plans to build a
biodiesel production facility in Rondonopolis, Mato Grosso, Brazil
with an annual capacity of 180,000 metric tons (54 million gallons
The plant will use soybean oil as its feedstock and is competitively
positioned to meet the large anticipated demand from soybean producing
farmers as well as from the Brazilian road and rail transport
industries. Additionally, it will be strategically located adjacent to
ADM?s existing soybean crushing plant in Rondonopolis to maximize
synergies between ADM?'s Brazilian origination, transportation and
processing capabilities.?

The Brazilian Automotive Industry:
Perspectives on Investment Strategies and Regional

   ?Volkswagen has warned it will close down its main factory in
Brazil if an agreement is not reached with the unions on a
restructuring plan which contemplates leaving 6.000 workers redundant.
The German manufacturer said that if the restructuring plan is not
implemented the Anchieta plant in São Bernardo do Campo is condemned.
"Without an agreement Anchieta will not have the necessary conditions
to compete for new investments, which would make it unviable in short
term operations", reads a document from the company.

The restructuring plan announced last May includes the elimination of
5.773 jobs by 2008 out of a payroll of almost 22.000 in five plants
Volkswagen has in Brazil.?

   ?The Brazilian auto industry will finish the current year with
record high production volume of 2,450,000 vehicles, an 11% increase
over 2004, according to ANFAVEA, the national association of
automobile manufacturers. Success is largely due to a 29% increase in
exports -- historic numbers that contrast with growth in domestic
sales of barely 5%. Nevertheless, not everything is going well for
automakers. Analysts predict that 2006 will be full of challenges due
to the rising value of the Brazilian real, which is making it harder
to sell in foreign markets. In addition, the domestic market is
hobbled by one of the world's highest interest rates (18.5%).
Forecasters do not expect economic growth to be strong enough to
generate many new jobs or to raise the population's ability to
purchase big ticket items like cars. In short, while the auto industry
has some reasons to celebrate, it is also casting a wary eye on the

Additional Reading
Brazil to Use 38,000 Poor Families to Produce Biofuel

Large companies of Brazil

Dated, from 1999, but interesting none the less ?  Challenges and
Opportunities Facing the Brazilian Energy Sector

Brazilian Economics Links

Prices, Preferences or Endowments?

Philanthropy in Brazil

Business in Brazil

   I hope this has adequately answered your question. If not, please
request an Answer Clarification, and allow me to respond, before you
rate. I will be happy to assist you further on this question.

Regards, Crabcakes

Search Terms
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Subject: Re: Structure, Players in Brazil, Brazil economy
From: huiuhoi-ga on 04 Oct 2006 11:22 PDT
thanks for asking!

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