Jun 13, 2012

Four Latin-American countries form new economic integration pact

There is a new group of nations in Latin America – the Pacific Alliance - uniting Mexico, Colombia, Peru and Chile.

Presidents of the four nations formally launched the economic integration pact at one of Earth’s most powerful deep space observatories in Santiago, Chile.

Colombian president Juan Manuel Santos said their first big move would be to drop visa requirements so citizens of all four countries could travel freely between them.

Chilean president Sebastian Pinera said the group’s goals included free trade and economic integration, with a clear orientation towards Asia.

Tags Mexico Chile Colombia Peru Brazil New Nations

In anticipation of Rio+20, Brazil creates new nature reserves and closes major land-fill

Brazil announced plans to protect an additional 10 000km² of land and pledged not to let economic woes stop it from implementing other measures to protect the environment.

According to the Environment Ministry, the country's total surface area under preservation - including reservations for indigenous people - would increase to 770 000km² under decrees signed by President Dilma Rousseff just days before the start of Rio+20, a United Nations summit on sustainable development in Rio de Janeiro.

“Brazil accounts for 75% of all protected environmental zones created in the world since 2003,” Rousseff said.

The head of state, who recently opposed a partial veto of a controversial law reducing the protection of the Amazon rainforest, also announced that 6 418km² of land was deforested in 2011, down from a peak of 27 000km² in 2004.

“More than 80% of the Amazon's original vegetation remains intact and between 2004 and 2011 the rate of deforestation dropped by 78%,” Rousseff noted.

Speaking on World Environment Day, she also stressed that economic problems should not serve as a pretext to abandon efforts to safeguard the planet.

“The crisis can't be an argument to suspend measures to protect the environment, much as it can't be an argument to suspend policies of social inclusion,” Rousseff said.

More than 100 heads of state and tens of thousands of participants from governments, the private sector and NGOs will converge on Rio de Janeiro 20-22 June for the Rio+20 United Nations Conference on Sustainable Development.

Likewise in advance of the Rio+20 summit the state government of Rio do Janeiro last week announced the closure of one of the world’s largest open-pit landfills, where thousands of people have made a living sorting the debris.

Long a symbol of ill-conceived urban planning and environmental negligence, the Jardim Gramacho dump is being transformed into a vast facility that will harness the greenhouse gases generated by the rotting rubbish and turn them into fuel capable of heating homes and powering cars.

Environmentalists had blamed Gramacho for the high levels of pollution in Rio's once pristine Guanabara Bay, where tons of run-off from the garbage had leaked.

Less clear is what will happen to the more than 1.700 people who worked at the site, scaling hills of fresh, fly- and vulture-covered trash to pluck recyclable plastic, paper and metal from the 9.000 tons of detritus once dumped there daily. 
 


Tags RIO20 Brazil

Santander bank chief praised Brazil as “the place to be to make business”

Emilio Botin president of Santander, Spain’s largest bank and one of the leading EU financial institutions said that Brazil is the top priority for the group since it is the source of 30% of its global earnings and anticipated the opening of more branches in merit to the country’s economic stability and social progress.

Emilio Botín: Brazil is top priority and the source of 30% of the group’s profits

Botin was in Brasilia this week as part of the official Spanish delegation headed by King Juan Carlos visiting Brazil, and denied point blank any divestment possibility insisting that the Santander group is “delighted and fully satisfied” with its business in the country and pledged to continue to invest.

Santander so far has invested 27 billion dollars in Brazil, a market in which the whole Spanish investment is estimated in 85 billion dollars.

Following praise for King Juan Carlos and his “fantastic work” in support of Spanish corporations in Latin America, Botin added that “whoever is not in Brazil is not in Latin America” and underlined “for Spain it is essential that Brazil is doing good”.

The president of the Santander board said he was very optimistic about Brazil a country which according to his opinion in “two to three years will become the world’s fifth largest economy”, plus the fact the country has economic stability, legal security and a solid institutional framework.

“This for our business means the Brazilian financial system is modern, well regulated and with a central bank really independent”, emphasized Botin.

He also praised the entrepreneurial leadership of Brazil, “potent and innovating” and the administration of President Dilma Rousseff who has consolidated Brazil’s long term economic growth with distribution of wealth.

The strong statements from Botin follow repeated articles in the Sao Paulo financial media saying that Santander was in negotiations to sell 40% of its stock to leading Brazilian banks with the purpose of capitalizing the bank in Spain.

However President Rousseff ordered any discussions or negotiations on the issue to stop since her government is in a strong struggle with the Brazilian banks to bring down interest rates.

Allegedly according to Rio’s O’Globo, the Brazilian leader argued that any takeover of Santander would make the “Brazilian banks’ oligopoly” even stronger and more challenging for her government’s arm-twisting attempts to convince them to lower the cost of lending money, as part of propping an economy that is slowing down.
  

Tags santander brazil

May 26, 2012

GE invests $300 mn in Brazilian firm

Brazilian mogul Eike Batista's Grupo EBX has announced a "strategic accord" with General Electric Co.

It involves GE paying $300 million for a 0.8 percent stake in the industrial conglomerate.

GE's stake will take the form of shares in Centennial Asset Brazilian Equity LLC and other offshore holding companies connected to EBX.

The GE investment will bolster the conglomerate's "solid" financial structure and fund new projects, EBX said.

"EBX is already a large GE strategic partner and by strengthening our existing relationship, this investment opens up more opportunities in key resource-rich areas of the world," GE Chairman and Chief Executive Jeff Immelt said in a statement.

GE is a key supplier to EBX units in sectors such as oil and gas, energy generation and mining, the Brazilian company said.

"The GE investment solidifies what has been a great partnership," Batista said.

Major EBX components include oil company OGX, miner MMX, shipbuilder OSX, logistics firm LLX and energy concern MPX, all of which are publicly traded.

Brazil's richest person disclosed in March that he sold a 5.63 percent stake in EBX to Abu Dhabi state investment fund Mubadala for $2 billion.

With an estimated fortune of $30 billion, Eike Batista is the world's seventh-richest person, according to Forbes magazine.

Brazil and China, Oiling the Wheels of Business

Brazil and China, Oiling the Wheels of Business 
By Fabiana Frayssinet 

RIO DE JANEIRO - China's demand for energy has prompted it to embrace Brazil as a major oil partner, fueling the dramatic expansion of Chinese companies in the South American country. While some see this as a boost to the Brazilian economy, others fear that it poses a risk to this country's future self-sufficiency. 

China has been Brazil's principal oil investor in the past three years, through China Petrochemical Corp (Sinopec) and Sinochem Corp (Sinochem), energy expert Adriano Pires told Inter Press Service. China, which is now Brazil's main trading partner, has invested some US$15 billion, especially in purchases of assets in companies already operating in Brazil in offshore oil exploration and production. 

"China's strategy is to secure oil reserves to guarantee its supply," said Pires, the director of the Brazilian Center for

Infrastructure (CBIE). It is following the same plan in other Latin American countries, such as Argentina and Venezuela, and in other regions, like Africa, he said. 


The Brazilian Export Promotion Agency reported that China intends to increase its strategic oil reserves by 60%, and is willing to go anywhere in the world to do this. According to CBIE, China's involvement in Brazil's oil industry started in 2010 when Sinochem bought 40% of the shares of Norwegian company Statoil in the Peregrino field, in the Atlantic ocean off the southern port city of Santos, in a deal worth $3.1 billion. 

The same year, Sinopec invested $7.1 billion to take over 40% of the Brazilian subsidiary of the Spanish transnational Repsol. 

In March this year, Sinopec 30% of Petrogal Brasil, which is responsible for the oil and gas exploration and production activities of Portugal's Galp Energia in Brazil, for $4.8 billion. 

Chinese capital also teamed up with Brazilian state oil giant Petrobras to develop offshore areas in the northern Para-Maranhao basin, and with Anglo-French oil company Perenco in the southeastern Espirito Santo basin. 

Pires said the Chinese firms are also interested in acquiring shares in OGX, an oil company owned by Brazilian millionaire Eike Batista, who already has Chinese partners in his mining and metal businesses. 

"Brazil is a source of oil and gas, which are strategic resources for sustainable growth in China, but we are also very interested in the Brazilian market," Tang Wei, the head of the Brazilian-Chinese Chamber for Economic Development, told local media. 

Pires said this interest is due to China's need to supply its rising demand for fuel, partly to fill the tanks of the cars driven by the growing middle class. 

China is the world's second-largest oil consumer, at 9.5 million barrels per day (bpd), following the United States, which uses between 18 and 20 million bpd. In a few years, China is expected to take the lead. 

In parallel with its economic activities in Brazil, China's oil purchases have also grown. CBIE statistics indicate that China is the second-largest importer of Brazilian crude, after the United States, and again the trend predicts that China will overtake the US in the near future. 

The Foreign Trade Secretariat of the Brazilian Ministry of Development, Industry and Commerce said exports of crude to China increased from 1.6 million barrels in 2001 to 50.6 million barrels in 2011. 

China has set its sights on the recently discovered deposits below the salt layer at the bottom of the Atlantic ocean off the Brazilian coast, at a depth of over 7,000 meters. The 55 billion barrels of estimated recoverable oil in these reserves could make Brazil one of the world's major oil exporters. 

"China has no experience operating offshore oil platforms, so it leaves that side of things to Petrobras or Repsol," which have more technical know-how for deep water drilling, Pires said. 

Beijing's strategy became plain in 2009, when the China Development Bank agreed with the government of then president Luiz Inacio Lula da Silva (2003-2011) to lend Petrobras $10 billion in return for guaranteeing Sinopec's exports of crude to China, initially 150,000 bpd, rising later to 200,000 bpd, at market prices.
The Brazilian business community takes a positive view of China's prominent role, saying it makes the market more dynamic. China is also partnering Brazilian companies in the refinery sector and in production and distribution of equipment for crude oil exploration and extraction. 

"There is no risk [in doing business with China]. It suits Brazil because it brings in money. It's good business," said Pires. 

In contrast, the head of the Association of Petrobras Engineers (AEPET), Silvio Sinedino, is concerned that China's appetite for oil and gas may lead to rapid exhaustion of these finite resources. AEPET advocates a return to monopoly status for Petrobras, which has been partly opened up to foreign capital. The association believes Brazil should not aim to be a big oil exporter; instead, it should ensure its own self-sufficiency, and any exports "should be marginal". 

"Countries like China and the United States are avid consumers of oil," said Sinedino. "With such voracious, growing demand, our pre-salt reserves could run out in 15 or 20 years, when we could make them last at least 30 years. 

"Brazil cannot become another Middle East for crude exports. We have to meet our own needs first, and sell oil as and when possible, protecting our national wealth," he said, recalling the campaigns that led to the creation of Petrobras over half a century ago with the slogan "O petroleo e nosso!" (the oil is ours).

"Oil is not just any commodity. It has great geopolitical importance," Sinedino said. AEPET "is sympathetic" towards the Argentine government's expropriation of Repsol shares in order to take control of YPF, the biggest Argentine oil company. 

China's interests in Brazil include other sectors that are key to supplying its appetite for commodities, such as soybeans and iron ore. 

Brazilian Government Sets Guidelines for Success at Rio+20


By Fabiana Frayssinet

RIO DE JANEIRO, May 15, 2012 (IPS) - As the host of Rio+20, the Brazilian government has defined guidelines for achieving success at the upcoming world summit, whose aim is to assess and strengthen what has been done since the 1992 Earth Summit, the first global meeting on sustainable development.

There is still no consensus on the draft outcome document for Rio+20 - the United Nations Conference on Sustainable Development - but Brazilian Environment Minister Izabella Teixeira confidently forecasts positive results. 

"Those who do not attend will regret it. Representatives from assertive, self-confident economies will be present," said Teixeira, referring to countries that have already confirmed their attendance at the Jun. 20-22 summit, including "emerging countries with a new importance" in their own right. 

Participation by many heads of state is seen as a first step for the success of the conference in Rio de Janeiro, as it demonstrates "the great extent of international interest on the topic," said the executive secretary of the National Commission for Rio+20, Luiz Alberto Figueiredo. 

Giancarlo Summa, the coordinator of the U.N. Information Centre in Brazil, said that so far 135 heads or deputy heads of state and government have confirmed their attendance, including presidents, vice-presidents and prime ministers, among the 183 confirmed country delegations out of the total of 193 U.N. member countries. 

In Minister Teixeira's view, the conference will be "exceptionally" successful if it concludes with "an obligation for everyone" to meet commitments on sustainable production and consumption. 

This implies a type of consumption that involves "rights and obligations for all," she said at the 2012 Sustainable Congress organised by the Brazilian Business Council for Sustainable Development. 

Sitting next to Figueiredo, with whom she participated in a debate with journalists who will be covering Rio+20, Teixeira spoke of other expected results, such as agreement on "a business platform that will engage in a commitment to the green economy." 

She said the private sector had played a "very timid" role at the Earth Summit 20 years ago. 

Figueiredo, meanwhile, outlined a list of issues the Brazilian government would like to see enshrined in the final document, so that the meeting is not dismissed as a failure by the press. 

Among them, the diplomat mentioned the need for the conference to leave "a legacy" for the future, like the 1992 Earth Summit, which had an "essential" role in persuading "entire generations to be concerned about sustainability." 

He also said he hoped that Rio+20 would define "what we want in terms of a green economy" and establish sustainable development goals. 

In regard to the controversial idea of creating a new U.N. environmental agency, Figueiredo said Brasilia supports strengthening the existing U.N. Environment Programme (UNEP). 

"UNEP should be strengthened as an environmental pillar, because in its present condition it is incapable of adequately carrying out its task," he said. 

Brazilian environmental organisations have criticised what they see as a lack of leadership from the government of President Dilma Rousseff in the run-up to the summit, as well as the generally abstract tone of the document negotiated so far between U.N. member states. 

The deputy executive secretary of the Socio-Environmental Institute (ISA), Adriana Ramos, told IPS that in terms of the formal discussions, "it is hard to envisage that the conference could succeed, because there are in fact no concrete proposals in the official document to generate commitment." 

Given this limitation, Ramos' hope is that Rio+20 "will serve to draw people’s attention to the difficulties and the necessary changes to ensure the future sustainability of the planet." 

Agreements are needed, such as changes to development evaluation systems so that they take into account environmental variables, or commitments to limit exploration for natural resources in the oceans, she said. 

In Ramos' view, commitments on reducing greenhouse gas emissions, established in the U.N. Framework Convention on Climate Change, should be renewed, although she believes it would be hard to meet them, especially for the Brazilian government in the light of the enthusiasm raised by the discovery of major oil reserves in undersea deposits off the Atlantic coast. 

Ramos does not agree with the idea of strengthening UNEP as an environmental governance body, and is in favour instead of creating a new structure within the U.N. "to guarantee fulfilment of environmental accords." 

"We need an agency that has real power to apply sanctions," she said. 

For his part, Nilo Dávila of Greenpeace said the success of the final document would depend on its reflecting not only what has to be done, but also the path that must be travelled to get there. 

The environmentalist commented to IPS about specific needs, such as preservation of oceans and forests, regulation of consumption and an end to fossil fuel use. 

Dávila said Rio+20 should renew commitments made at the 1992 Earth Summit that have not been fulfilled, like Agenda 21 (a comprehensive action plan on sustainable development) or the conventions on biological diversity and on climate change, while setting new goals based on the latest research and technological advances. 

"Rio+20 can be the beginning of that road. What we cannot do is miss another opportunity," he said. 

At the conference, world leaders and representatives of civil society will aim to make decisions about how to reduce poverty and inequality and at the same time ensure environmental protection in a planet that is ever more populated. 

The debates will contribute to setting the sustainability agenda for the next 20 years, as well as identifying goals and solutions for urgent global challenges, including lack of access to energy and clean water, overexploited oceansfood insecurity, growing inequalities and rapidly expanding cities. 

The conference will also try to come up with ways of boosting corporate sustainability, "green" job creation, the role of science and innovation, and funding for improved international cooperation, according to the U.N. Information Centre. (END)
 

Latin America funds poised to outperform

Latin America funds poised to outperform

With the hefty market disturbances over the last three months and the likelihood of problems over at least the next quarter or two, now might be a good time to review the performance of regional and country funds and reallocate where needed.

 Image courtesy Pedro Szekely: http://www.flickr.com/people/pedrosz/

Latin America has held up slightly better than some of the other emerging regions, largely due to its healthy growth in domestic consumption and relatively higher reliance on Asia and the U.S.for export sales. Most of the countries in the region are still registering strong GDP growth and inflation is close to or within the central banks' targets.

The iShares S&P Latin America 40 ( ILF , quote ) has underperformed the iShares MSCIEmerging Markets Fund ( EEM , quote ) over the course of 2012 due to its overweighting (54.2%) of Brazil while the Global X FTSE Andean 40 ( AND , quote ) has beaten both with returns of 6.3% over the same period.

The iShares S&P Latin America fund has lost 9.5% since the beginning of the year compared to a 13.7% loss in theiShares MSCI Brazil ( EWZ , quote ). The Global X FTSE Colombia 20 ( GXG , quote ) has had a stellar run with a return of 14.9%, well above Andean partner funds like the iShares MSCI Chile ( ECH , quote ) and the iShares MSCI All Peru ( EPU ,quote ) with gains of 1.6% and 4.4% over the same period.

The Andean region (Chile, Colombia, Peru) continues to be the standout with the three country funds the only winners so far this year.

Chile is still the most closely correlated with copper prices and will probably underperform until global growth picks up.

There are worries that credit growth is overheating, especially in Colombia, but we're still well off from a bubble environment. Colombia should continue to do well as it aggressively signs free trade agreements and attracts foreign investment. While Colombia's economic progress should remain intact, the 14.9% gain in its country fund does not offer the best value.

Peru's market is still relatively small and stands to gain the most from market integration. The best bet is probably still adiversified play on the region with the Andean fund.

Brazil may rebound in the first half from recent economic weakness but policy risks remain a worry for investors. The government has intervened aggressively in the foreign exchange markets pushing the real to the weakest level since 2009 and making it the worst performing currency tracked by Bloomberg.

Appearances of integration and political pressure between the central bank and the government have raised questions of central bank independence and weakened the country's economic stability. While the country fund will most certainly rebound over the long-term, headline risk from government intervention means that short-term risk adjusted returns will be below peers.

Even Mexico, with its strong export growth and relatively stable economy has seen losses in its benchmark country fund. The iShares MSCI Mexico Investable Fund ( EWW , quote ) has lost around 0.7% of its value since the beginning of the year, but is off 12.0% from its highs earlier this month. Despite higher than normal unemployment, the country benefits from a strong domestic demand and economic growth in theUnited States. Core inflation is down around 3.5% and rates are still high enough to give the monetary authorities room to ease. While the country fund will probably not outperform the Andean countries over the rest of the year, volatility is low and it acts as a good diversifier to a Latin American portfolio.

In last place with a government-induced disappointment is the Global X FTSE Argentina 20 ( ARGT , quote ) with losses of 28.1% since the beginning of the year. The country is still facing a difficult economic reality and is shut out of the bond market for financing. Macroeconomic and political intervention have trumped corporate-level performance and will continue to do so this year. While the money on the short side may have been made, the odds are still against any kind of a rebound.

I would continue to favor the Andean region in the portfolio and avoid equities or funds with exposure to Argentina. Investment in the broader S&P Latin America Fund is largely a bet on Mexico and Brazil with some marginal exposure to other countries. Mexico may do well, but significant risks remain in Brazil so I would avoid the fund and go directly with the Mexican country fund.

Further losses to global equity markets are likely over the next few months as the crisis in Europe works its way out. Investors may want to take a short position in larger global funds that can help mitigate losses in Latin America exposure. Once global risks subside, these regional and country funds should rebound quickly and outperform developed marketfunds.

Boeing Partner Northrop Grumman Signs Pact with Brazilian Machining Companies

Boeing's Super Hornet industry partner Northrop Grumman has signed Memorandums of Agreement (MOAs) with two Itajubá-based companies that could expand their precision-machining opportunities in the global aerospace and defense industries.

(Photo: REUTERS)<br>Boeing’s super hornet industry partner Northrop Grumman has signed Memorandums of Agreement (MOAs) with two Itajubá-based companies that could expand their precision-machining opportunities in the global aerospace and defense industries.

Boeing’s super hornet industry partner Northrop Grumman has signed Memorandums of Agreement (MOAs) with two Itajubá-based companies that could expand their precision-machining opportunities in the global aerospace and defense industries.
The MOAs with GNS Industry and Trade and RCS Precision Machining and Maintenance outline plans for each company to explore work packages with Northrop Grumman and its suppliers for precision-machined aluminum components and subassemblies.

"GNS and RCS are experienced precision-machining manufacturers for the automotive, oil and steel industries, and have already made forays into aerospace," Steve Hogan, Northrop Grumman vice president and programme manager, F/A-18 Programs said in a statement. "Our machining specialists view both of these companies as well positioned for expanded opportunities in the aerospace and defense industries."

According to Boeing's official website, the MOAs resulted from a March 2012 assessment of companies in the state of Minas Gerais that evaluated local aerospace capabilities and identified opportunities to work with Boeing, its Super Hornet industry partners and their extended network of suppliers.

The Boeing-led assessment and resulting collaborations are part of the ongoing industrial engagement throughout Brazil in support of the F/A-18E/F Super Hornet bid in Brazil's F-X2 fighter jet campaign.

"Brazilian companies continue to demonstrate their aerospace capabilities, and Boeing and its industry partners are committed to identifying opportunities for them to work with us and our suppliers," said Megan Weinstock, manager of Supplier Management in support of International Strategic Partnerships for Boeing Defense, Space & Security.

"These endeavours are key to forging long-term business relationships with companies that can help us offer the right solutions to our customers," he said.

Northrop Grumman is a leading global security company providing innovative systems, products and solutions in aerospace, electronics, information systems, and technical services to government and commercial customers worldwide.

The American aerospace and defence technology company is regarded as one of the largest defence contractors in the world and the largest builder of naval vessels.

Volkswagen takes on Toyota for share of the Latin American light-truck market

In a battle waged from Miami, relative newcomer Volkswagen is challenging dominant leader Toyota for a slice of the fast-growing Latin American light-truck market.

VOLKSWAGEN GROUP LATIN AMERICA

•  Business: Oversees and promotes marketing and sales of Volkswagen pickup trucks and vans, including the Amarok, T5, Crafter and Saveiro, in 21 Latin American countries.

•  Latin America and Caribbean headquarters: Miami.

•  Office established in Miami: 2009.

•  Employees: VW Commercial Vehicles has 15 in Miami and approximately 100 brand management staff in the field. The Miami office, which covers VW Commercial Vehicles and VW brand Audi in Latin America, has 30 employees.

•  Vice president of operations: Fernando Badia

•  Website:http://www.volkswagen-cv-la.com/region/latin/en.html

Source: Volkswagen Group Latin America

One battle in the car wars among manufacturers in Latin America is being waged from offices in Miami.

Germany’s Volkswagen AG, which has its Latin American headquarters in Miami, is challenging Japan’s Toyota Motor Corp., also with a regional office here, for a slice of a small but expanding market: light pickup trucks and vans, known in the auto business as light commercial vehicles.

“Toyota has been the owner of the light commercial vehicle market in Latin America for many years, but we are making a major effort to gain market share,” said Fernando Badia, vice president of operations at Miami-based Volkswagen Group Latin America, who heads the company’s efforts to expand its VW Commercial Vehicles brand in the region.

In this battle for market share, VW Commercial Vehicles is pitting its four-door, diesel-powered Amarok pickup truck against the ruling champion, Toyota’s Hilux pickup, which comes in several different models but is not sold in the United States. VW also sells four other light commercial vehicles in the region — the T5, Crafter, Caddy and Saveiro. In addition to the Hilux, Toyota offers the Hiace van and sport utility vehicles like Fortuner and RAV4.

Since opening its Latin America regional office in Miami in 2009, VW Commercial Vehicles has built a network of importers, dealers and service points in the region, starting with and expanding on the existing VW dealership structure, introduced its commercial line and increased sales to approximately 4.5 percent of the light commercial vehicle market in its operating area, Badia said.

“We started out with sales of 7,152 vehicles in 2009,” Badia said, “and last year we sold 17,229. In the first quarter of 2012, our light commercial vehicles sales are up 30 percent from last year. Our goal is to reach 10 percent market share by 2018.”

The strongest sales to date are in Mexico, Chile, Colombia, Uruguay and Peru. The top seller is the Amarok, which is made in Argentina.

In comparison, Toyota sold 101,000 light commercial vehicles in 2011, not including SUVs.

Even though this product line accounts for a small share of more than 5.7 million cars, trucks and other vehicles sold throughout the region last year, VW sees strong growth opportunities for its pickup trucks and vans. As Latin American economies continue to grow — even at slower rates than in recent years — new businesses are set up in urban and rural areas and millions of people join the middle class. These vehicles come in models that also appeal to consumers looking for passenger vans and family-friendly pickups.

“There are tremendous opportunities,” Badia said. In Chile and Peru, for example, mining companies need small commercial vehicles in addition to heavy trucks, he noted. Farmers, coffee growers, fishing enterprises and oil and gas operations also use these vehicles. “And small businesses are being established all over the region. Our job is to reach these new customers.”

Badia, an industrial engineer from Argentina, is responsible for 21 countries in Latin America, excluding Argentina and Brazil, which are advancing their own marketing programs along similar lines. VW Commercial Vehicles shares the Miami regional headquarters with VW brand Audi, which sells passenger cars in Latin America.

The auto sector in Mexico, Central America, South America and the Caribbean is highly competitive in all segments — passenger cars (ranging from economical to luxury), SUVs, vans, light and heavy trucks, buses — and cuts across a wide range of markets in 36 countries and territories, plus Puerto Rico. In overall vehicle sales, General Motors Co. said it captured 18.8 percent of the market in 2011, with sales of nearly 1.1 million Chevrolets, making it the market leader in overall sales. GM competes with Ford, Toyota, VW, Chrysler, Fiat, Nissan, Honda, Hyundai, Kia and Chinese imports.

VW Commercial Vehicles introduced its first products in Mexico in 2007, but its broader Latin America effort didn’t begin until the regional office was set up in Miami two years later.

VW STRATEGY

Badia traveled through the region, meeting the businesspeople who imported Volkswagen passenger cars and who ran the distributorships. Showing them VW’s line of new commercial vehicles, Badia had to persuade existing dealers to expand their showrooms and repair services to accommodate the new product line, add new dealerships or find additional investors who would establish new dealerships.

“Volkswagen was perceived in the region as a metropolitan, passenger car,” Badia said. The challenges were to introduce the new vehicles, convince investors that the line would resonate with consumers and expand into rural areas, where customers are underserved, he noted.

VW Commercial Vehicles offered investors assistance in marketing and advertising, as well as other incentives, and launched a major media campaign throughout the region. It set up a 90-day trek for five Amaroks that drove from Argentina to Mexico, visiting dealerships along the way, ran the Amarok in the Dakar Rally and staged scores of publicity events. “We’ve invested over $6 million a year to promote our vehicles,” Badia said.

The efforts have paid off. Unit sales more than doubled, with Amarok leading the pack. The number of importers handling VW Commercial Vehicles has grown from three in 2009 to 22 today. Dealerships rose from 32 to 287 over the same period. An additional 36 dealers in Latin America are remodeling or adapting their facilities to begin selling Amaroks and other VW light trucks and vans, and Badia says he is planning to expand into Nicaragua and Trinidad and Tobago.

TOYOTA UNFAZED

Toyota does not seem worried about the new competition. The Japanese company sold 101,000 units of light commercial vehicles in Latin America last year and 23,000 units during the first quarter of 2012, according to figures supplied by Miami-based Kei Fujita, Toyota’s senior executive coordinator for Latin America (excluding Mexico).

Hilux, Toyota’s 1-ton pickup, accounts for 90 percent of its commercial vehicle sales, Fujita said in an email, and General Motors and Nissan are the closest competitors. Fujita added that he was “not sure if [VW Commercial Vehicles] took our market share,” and said that while his company respects the competition, “We continuously improve our product and service in order to keep exceeding customers’ expectations. Through a long history, our Hilux has been perceived as the dependable and reliable vehicle.”

David Cutting, senior manager of North America Forecasts at LMC Automotive, which provides automotive production forecasts and market intelligence, said that Volkswagen has increased its share in the total pickup and van segment, but faces strong competition from other manufacturers. “The overall truck market in South America has become more competitive,” he said.

Badia does not seem concerned about the prospects for a long, uphill battle in the region.

“This will not be easy,” he said. “But the market is growing and customers find our vehicles very appealing … look what we’ve achieved so far.”

Northrop signs MOUs with Brazilian firms

ITAJUBA, Brazil, May 16 (UPI) -- Northrop Grumman has signed agreements with two Brazilian companies for possible precision aerospace and defense machining work.

Boeing, with which Northrop is partnered on the F/A-18E/F Super Hornet, reported the Memorandums of Agreement were signed by Northrop with GNS Industry and Trade and RCS Precision Machining and Maintenance. The MOUs outline plans for each company to explore work packages with Northrop Grumman for precision-machined aluminum components and sub-assemblies.

"GNS and RCS are experienced precision-machining manufacturers for the automotive, oil and steel industries, and have already made forays into aerospace," said Steve Hogan, Northrop Grumman vice president and program manager, F/A-18 Programs. "Our machining specialists view both of these companies as well positioned for expanded opportunities in the aerospace and defense industries."

Boeing and its Super Hornet partners in March visited the Brazilian state of Mina Gerais. The purpose was to evaluate local companies with aerospace capabilities for working as suppliers for the Super Hornet, which is being offered to the Brazilian military.

"Brazilian companies continue to demonstrate their aerospace capabilities, and Boeing and its industry partners are committed to identifying opportunities for them to work with us and our suppliers," said Megan Weinstock, manager of supplier management in support of International Strategic Partnerships for Boeing Defense, Space & Security. "These endeavors are key to forging long-term business relationships with companies that can help us offer the right solutions to our customers."

The center and aft fuselages, as well as vertical stabilizers on the Super Hornet are manufactured by Northrop Grumman.



Read more: http://www.upi.com/Business_News/Security-Industry/2012/05/16/Northrop-signs-MOUs-with-Brazilian-firms/UPI-93241337179703/#ixzz1w0Bx4efW

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May 15, 2012

Brazil Forging Strategic Alliance with Africa

RIO DE JANEIRO, May 7, 2012 (IPS) - The Brazilian government of Dilma Rousseff is taking firm steps towards stronger relations with Africa, such as the creation of a special fund to finance development projects together with multilateral lenders like the World Bank.

South America’s giant is keen on establishing a strategic association with Africa, and the tool for doing that is its powerful national development bank, the National Bank for Economic and Social Development (BNDES), which will work in conjunction with the multilateral African Development Bank (AfDB). 

"There is a 40-billion-dollar shortfall in financing for a spate of 50 projects, which means the African Development Bank will have to scale up its capital and its activities," said BNDES president Luciano Coutinho. He added that not only public bodies need to be involved in this cooperation, but also private banks in the capital markets. 

The alliance was announced at an Apr. 3 seminar on "Investing in Africa: Opportunities, Challenges and Instruments for Economic Cooperation", organised by the BNDES in Rio de Janeiro, which drew delegates from development institutions, business leaders, and personalities like former Brazilian president Luiz Inácio Lula da Silva (2003-2011). 

André Esteves, the president of the private Brazilian bank BTG Pactual, also announced the launch of a one-billion-dollar risk capital fund for investment in Africa. 

"This will be the biggest private sector contribution for investment in that continent, and a show of the (Brazilian) business community’s affinity with the government strategy," he said. 

Makhtar Diop, World Bank vice president for Africa, listed some of the enormous challenges in Africa: integrating the continent in terms of transportation, ports, railways, and telecommunications; managing natural resources like water; energy development; and the struggle for food security. 

To boost the continent’s competitiveness in the global market and address the infrastructure deficit, Africa needs at least 68 billion dollars in investment up to 2020, according to the Programme for Infrastructure Development in Africa (PIDA). 

The World Bank particularly supports PIDA, a joint initiative of the African Union Commission (AUC), the New Partnership for Africa's Development (NEPAD), and the AfDB. 

"We are working together to grow the programme, which is a window of opportunities for the poorest countries," Diop said. 

AfDB director Alex Rugamba explained to IPS that "PIDA covers the sectors of transport, energy, water resources and information and communication technologies (ICTs)." 

"It was designed for a period of 30 years, because without infrastructure we will not be able to reach the goal for the continent of six percent economic growth," he added. 

Rugamba said the programme must be given priority, in order to maintain steady growth over the next few decades. Forty billion dollars in investment will be needed in the energy sector alone, he added. 

Brazil’s exports to Africa climbed from 2.4 billion dollars in 2002 to 12.2 billion dollars in 2011, while total trade – exports and imports – soared from 4.3 billion dollars to 27.6 billion dollars in the same period. 

Diop and Rugamba both said that Brazil would play an important role in boosting investment in infrastructure in Africa. 

"Brazil has experience in the process of harnessing water resources," said Diop. "It has been a pioneer in clean energy from this source, with large dams already operating and under construction, and it has an excellent track record in mining and oil production." 

Africa is a new market, said Maria das Graças Foster, the CEO of Brazil’s oil giant Petrobras, who noted that the company is active in Angola, Namibia, Libya and Nigeria. 

She pointed out that "important oil reserves have been found in Ghana and Uganda, while production now stands at 58,000 barrels a day in Nigeria, and at 2,000 barrels in Angola." 

Murilo Ferreira, the CEO of Brazilian mining firm Vale, stressed that the company has 7.7 billion dollars in investments in nine African countries, in copper, coal, iron ore and nickel mines. 

Ferreira also said 900 kilometres of railways and a deep-water port are being built in Mozambique. 

"It’s a long-term vision, and we want to achieve environmentally sustainable and socially responsible ways of doing things," he said. 

"We need to increase dialogue with local society, because we don’t want to come across as imperialists," he added. "We are willing to address the demands of each population (in the countries) where we are active, because we aren’t perfect, and sometimes we make mistakes. It’s necessary to be humble enough to admit one’s errors." 

Former president Lula praised his country’s efforts in forging closer ties and cooperation with the economies of Africa. This is "a moment that requires audacity, to build a new Africa," he said. 

"Peace, democracy, growth and distribution of wealth are Africa’s watchwords for the 21st century. This is a time for unity and solidarity. Today there is a wealth of opportunities to be exploited by Brazilians, other South Americans, and Africans." 

Lula said "Africa cannot be looked at like it used to be seen, as a simple supplier of minerals and gas…We have to find African partners. We don’t want hegemony; we want strategic alliances." (END)
 

Fair in Sao Paulo re-emphasizes city's status as Latin America's art mecca

SAO PAULO--Sao Paulo, Latin America's financial hub, cements its status as the region's cultural mecca this weekend with the 8th edition of its modern art fair that is attracting a growing foreign presence.

Officially known as SP-Arte, the country's biggest contemporary art fair is drawing a record 110 galleries, including 27 from abroad, at the Biennal pavilion designed by Brazilian star architect Oscar Niemeyer.

Among the foreign galleries represented at the event, which opened Thursday and runs through Sunday, are La Caja Negra and La Fabrica from Spain, Sprovieri and White Cube from London, Yvon Lambert from France, Leon Tovar Gallery from New York and Fernando Pradilla from Colombia.

“This is a historic edition with a higher presence of foreigners, not only foreign exhibitors, but also foreign visitors,” said fair founder and director Fernanda Feitosa, who saw this as a sign of the event's enhanced international prestige.

“Foreign visitors make up 10 percent of the total this year,” she told AFP as hundreds of art lovers thronged the three floors of the 15,000 square meter (161,458 square feet) exhibition hall in Sao Paulo's Ibirapuera Park.

“SP-Arte is among the top 10 art fairs in the world and it is definitely the best fair in Latin America,” she added.

Last year, the event drew 89 galleries, including 14 from abroad, as well as more than 18,000 visitors.

Rising affluence in this South American giant which now ranks as the world's sixth largest economy means that money is pouring into the thriving art market.

According to a recent study by the Brazilian Association of Contemporary Art, domestic galleries have seen their revenue grow by 44 percent over the past two years, turning Brazil into one of the world's most prosperous art markets.

APex Brasil, the domestic export promotion agency, said the country exported a record US$60 million worth of artworks last year.

“We are conscious of our role in this new reality in which the art market is no longer restricted to a minority but should be expanded to reach more classes of society,” said Fonteisa.

Eliana Benchimol, who owns a Rio gallery bearing her name, agrees.

“Brazilians are becoming more and more interested in art, particularly wealthy people in their 40s and 50s,” she told AFP.

“Sao Paulo is Brazil's wealthiest city and so it is not surprising that it also boasts the most dynamic contemporary art market,” she added.

Benchimol is here to exhibit works by well-established artists such Vik Muniz and Rubens Scarelli of Brazil or French-based Venezuelans Carlos Cruz-Diez and Dario Perez-Flores.

Her most expensive piece is “Psysichromie” in which Cruz-Diez combined color theory, science, kinetics, mechanical engineering to produce an innovative work that defies easy categorization.

Benchmol hopes it will fetch around US$250,000.

Alessandra Modiano, coordinator of the London-based gallery Sprovieri, also ranked the Sao Paulo fair as among the best in the world in terms of the quality of the work and the organization.

Sprovieri is showcasing “Fire Leap,” a 15-minute slide show of pictures of children by famed U.S. photographer Nan Golding, as well as works by Italy-based Greek artist Yannis Kounellis and young Brazilian artists.

The Tokyo-based gallery Kaikai Kiki meanwhile said it sold four pieces on the fair's opening day, including one by German artist Anselm Reyle that fetched US$150,000, according to its coordinator, Nao Tazaki.

Brazil's samba economy will keep on dancing

They call it the samba surge. Once described as the perpetual country of the future, Brazil is finally fulfilling its promise.

A reveller from the Vila Isabel samba school parades on the first night of the annual Carnival parade in Rio de Janeiro's Sambadrome
Studies estimate that 50m of Brazil's 200m people have joined its middle class over the past seven years Photo: Reuters

South America’s largest nation has overtaken the UK as the world’s sixth-largest economy, it expects to follow last year’s 7pc GDP growth with a 4pc advance this year and similar growth in the next few years, and is basking in an anticipated oil windfall of up to 90bn barrels.

The fifth-largest country in the world, with GDP per head that is greater than either India or China, Brazil increased its inflow of foreign direct investment by 87pc to $48bn (£30bn) in 2010 alone, putting the nation fifth in the world rankings of capital inflows

Inflation, which averaged a staggering 1,429pc between 1990 and 1994, is now down to 6pc, the unemployment rate is 5.7pc, compared with a 10.8pc average for the European Union and 8.2pc in the US, and the middle class is on the march.

Studies estimate that 50m of Brazil’s 200m people have joined its middle class over the past seven years. It has been dubbed the C-class, with wry observers saying that stands for casa (houses), cars, computers and cellphones.

“Brazil always used to be called the land of the future but the joke was that the future never actually arrived,” says Jaap Kuiper, managing director for Latin America at the decorative paints arm of chemicals giant AkzoNobel.

What changed all that is Brazil’s new position as China’s most important partner in its commodities boom, which has led to Brazilian exports surging from $50bn in 2000 to more than $200bn.

With the 2014 World Cup and 2016 Rio de Janeiro Olympics seeing proposed infrastructure investments of $90bn and $30bn respectively,The Economist devoted an issue to the nation’s boom under the cover headline of “Getting it Together Again”.

Not surprisingly, growth-starved Britain wants to get in on the act. Britain is Europe’s third-largest overseas investor in Brazil, behind Germany and the Netherlands, and UK Trade and Investment (UKTI) has recently produced two reports aimed at stimulating investment in Brazil.

It is urging UK companies to bid for more than £20bn-worth of Brazilian infrastructure projects relating to the Pedra de Ferro mining project in the north-east of the country as well as projects at the World Cup and Olympics.

British companies, including Rio Tinto, Shell, Unilever, BP, Wellstream, JCB Rexam, De La Rue, GlaxoSmithKline, Bunzl and credit-checking business Experian, already have significant investments in Brazil.

Moreover, BG Group has said that its £1.1bn sale of its majority stake in a Brazilian gas distribution business will allow it to invest more in upstream exploration and development projects in the nation.

Two names from Britain’s rich industrial past are also powering Brazilian expansion under the Dutch flag, following AkzoNobel’s acquisitions of Courtaulds in 1998 and ICI 10 years later.

Courtaulds opened its marine and protective coatings factory in Rio de Janeiro back in 1926 – five years before the erection of the city’s famous Christ the Redeemer statue, while ICI’s strong Brazilian business was a major reason for the company’s takeover.

Together, the two former British-owned operations account for about two-thirds of AkzoNobel’s €950m (£764m) Brazilian sales, which in turn is a sizeable slice of the group’s €16bn turnover.

Ton Buchner, chairman and chief executive of AkzoNobel, says: “I have been coming to Brazil regularly since 2000 and it has changed significantly.

“People were always saying that Brazil had this tremendous promise in itself but it never seemed to come out. But from 2005 onwards, the country has really delivered, grown and expanded.

“I would say that Brazil from 2000 to 2005 and then from 2005 to 2011 are two completely different pictures. I have seen this growth and Brazil is a country that is now fired up on many cylinders.”

Brazil’s commodities boom has clearly been a major driver.

Petrobras, the oil giant that is Brazil’s largest company, now has 650 refineries, 30,000km of pipelines, 80,000 workers and a stock market capitalisation of $164bn.

However, Brazil is also the world’s largest producer of iron ore, sugar, tobacco, orange juice, soya beans and, of course, coffee.

In addition, the nation has a major pulp and paper industry, fuelled by the conversion of former rainforest land to fast-replenishing eucalyptus trees.

“There’s been a fundamental richness in natural resources that has supported Brazil’s growth,” says Buchner, “and it has also been driven by consistent government policies over a period of time. Brazil has been predictable.

“What you see in Brazil, and one of the reasons why there are not so many imports into Brazil, is that the country is a domestic market that has a tremendous amount of local content requirement and, as a result, there is a tremendous amount of domestic supply of many, many products.

“Brands may have been introduced from abroad but you see a very high number of products in all the industries, from electric motors to paint, that are manufactured domestically.

“Brazil is a country that has relatively high import barriers so, as a result, many international companies have set up locally and these are businesses that supply to Brazil but they do not export very much from Brazil.

“It is Brazil for Brazil. But this is the fourth-largest market for AkzoNobel and our aspiration is to increase our Brazilian turnover to €1.5bn by 2015.”

Buchner warns, however, that Brazil’s cultural differences and onerous fiscal regime – the nation has 85 different business taxes, including punitive export duties – mean that foreign entrants coming into the market now face an uphill battle, particularly in industries where local players are already well established.

The worry, therefore, is that the UK, whose total exports to the BRIC economies of Brazil, Russia, India and China are still less than its sales to Ireland, may miss out on the Brazilian boom.

Still, plenty of British firms are rising to the challenge. UKTI reports a 500pc increase in interest in Latin America business opportunities generally from British companies over the past few years, and some major UK brands are targeting the country.

Luxury car maker Rolls-Royce is planning to enter Latin America for the first time in its 107-year history by launching a dealership in Brazil, while retail success story SuperGroup has said it will add Brazil to its existing franchises in Colombia, Panama and Venezuela if it can find a way of overcoming onerous import duties.

Edward Oakden, UKTI sectors group managing director, says the Pedra de Ferro project brings opportunities for British firms involved in mine infrastructure, road and rail-building, and the construction of shipping and container terminals and port developments.

A forthcoming UKTI trade mission to Brazil will give firms the opportunity to make direct contact with the bidding process.

One British infrastructure company targeting Brazil is Balfour Beatty, which last year set up an office in the country with the aim of winning business there.

“We are increasing the focus of our activity in markets where opportunities are bigger and growth rates higher than in the UK,” says chief executive Ian Tyler.

“We began making inroads into Brazil last year and Brazil and India are now priority emerging markets.

“Brazil represents a larger infrastructure market than the UK, is allowing private capital to play a growing role in infrastructure provision, and is making determined efforts to reduce corruption.

“In 2011, Brazil began a four-year growth acceleration programme to invest more than $500bn in logistics, including transportation, energy and social development.

“It is also encouraging for us to see the government’s endeavours to ensure the financing of this growth. Brazil has been letting infrastructure concessions since 1995 and introduced public-private partnerships in 2004.”

Plenty of challenges remain for Brazil, however. In terms of the ease of doing business, the country is ranked 126th in the world by the World Bank, while in terms of tax, it’s ranked 150th.

Richard Turner, deputy consul general at the British Consul in Sao Paulo and deputy director for trade and investment in Brazil for UKTI, tells of a UK whisky-maker whose finance department in Brazil is its largest anywhere in the world because the tax and accounting regulations are so complex.

The nation is also notoriously bureaucratic, with registration of some companies taking as long as two years, while Brazil’s social charges can add 70pc to 80pc to the cost of each employee’s wages.

The import taxes in particular call for a thoughtful approach to the Brazilian market.

Charles Morgan, chairman of Morgan Motor Company, is in talks with Felipe Cavalieri, chief executive of heavy construction vehicles distributor BMC, about potentially becoming Morgan’s first distributor in Latin America.

However, he says Brazil’s high import duties might mean that it makes more sense to operate there with a different business model, assembling car bodies and chassis in the country itself.

“We have never done that anywhere outside Britain before,” he said, “but we might do it in Brazil.

“There’s also a cultural aspect that’s very important. Do not think that we are going to fly the British flag. We are going to tailor a car for the Brazilian market. If that means painting it in the green and yellow of the Brazilian flag, so be it.”

Another mid-sized British firm expanding in Brazil is Brandenburg UK, a Birmingham-based designer and manufacturer of eco-friendly solutions for the management of pests, biting insets, bacteria and viruses.

The firm has already made the move to set up a small office in Sao Paulo but managing director Mathew Kaye says import duties are now amounting to 126pc of sales.

To combat this, he is planning to set up a manufacturing site in the northern Brazilian state of Amazonia, where there are attractive tax breaks designed to bring in investment.

Brazil has many challenges to surpass before it can be certain that it is finally fulfilling its promise. Economists warn that the inflation rate, while nothing like the hyperinflation of the past, is still too high and Brazil’s challenge is how to grow at a faster pace without taking it higher.

Infrastructure investments will help that objective, as well as relieve congestion in Rio de Janeiro and Sao Paulo’s car-packed streets and regenerate some of the nation’s housing stock.

AkzoNobel is helping by donating more than 370,000 litres of paint, which have already been used to renovate more than 2,000 buildings.

The company, which last week announced a contract to supply coatings for the roof of Brazil’s Maracana Stadium, which will host the 2014 World Cup final, has also launched a programme to repaint the 1,500 properties in Santa Marta, a once drug-infested favela in Rio de Janeiro.

It will take more than a lick of vividly-coloured paint to solve Brazil’s other challenges, which include weak secondary schooling, lagging innovation and poor brand recognition of Brazilian products outside their home territory.

Most commentators agree that the direction of travel for Brazil is positive, however.

The country used to be likened to a chicken in flight, flapping its wings with enormous effort to result in the passage of only a few yards. Now it is becoming a more accomplished bird of flight just as its neighbour Argentina is nationalising oil assets and showing worrying signs of reverting to the type of rule that has blighted South American economies for decades.

Economists expect Brazil’s samba economy to carry on dancing over the next two decades, surpassing Germany to become the world’s fourth-largest economy behind the US, China and Japan.

It will not be for the fainthearted but, faced with little excitement on domestic dance floors, the outstretched arms of Christ the Redeemer will look increasingly welcoming to British companies.

Brazil in numbers

$48bn Amount by which Brazil increased its inflow of foreign direct investment in 2010

6pc Brazil’s inflation rate, having averaged 1,429pc between 1990 and 1994

$90bn Amount being spent on infrastructure projects relating to 2014 World Cup

80,000 Number of workers employed by Petrobas, the oil giant that is Brazil’s largest company

€950m British companies ICI and Courtaulds account for two-thirds of AkzoNobel’s Brazilian sales

Brazil’s Ex-Leader Honored as Scholar

The Library of Congress will award the $1 million John W. Kluge Prize for lifetime intellectual achievement in the humanities and social sciences to Fernando Henrique Cardoso, who had a distinguished international career as a scholar before twice being elected president of Brazil. An official announcement will be made in Washington on Monday, with an awards ceremony there on July 10.

Gregg Newton/Reuters

Fernando Henrique Cardoso, while serving as president of Brazil in 1998.

In a citation Mr. Cardoso, who is 80 and lives in São Paulo, is described as “a scholar of enormous intellectual energy” and praised for his “deeply original analysis of the interplay among political, economic and social processes.” The citation also notes that “throughout his life Cardoso has asked difficult questions and often defied conventional wisdom” in his wide-ranging research and writing.

“In purely scholarly and academic terms he has to be considered the outstanding political scientist in late-20th-century Latin America,” said James H. Billington, the librarian of Congress. “It’s not just that he’s the first person with a personal political career of consequence to win this award, it’s that he is also a full representative of what we call a social scientist. If you want to make an American comparison, he is like Jefferson, playing a key role in building a democracy on a scholarly foundation.”

Brazil has become the world’s sixth largest economy, having recently passed Britain and Italy, and has a dynamic and growing middle class, numbering more than 100 million. As president from 1995 through 2002 Mr. Cardoso was the primary architect of that rise. He presided over the elimination of hyperinflation and initiated sweeping social investment and income redistribution programs, which his two successors have extended and deepened.

“I was always preparing myself to understand society and macroeconomics, so of course when I had the chance to become president, I tried to apply that knowledge,” Mr. Cardoso said in a telephone interview from São Paulo, where he now oversees the first presidential library in Brazil and a research institution that bears his name. “I didn’t plan it that way, but the concern, the preoccupation with how to construct a decent society was always there.”

Though not awarded annually, the Kluge Prize, first given in 2003 and last granted in 2008, is a sort of Nobel Prize for achievement in the humanities and social sciences, categories the Nobel overlooks. Previous recipients include the Polish philosopher Leszek Kolakowski, the American historian John Hope Franklin, the Chinese-born expert on Confucianism Yu Ying-shih and the French philosopher Paul Ricoeur.

Mr. Cardoso’s interests are expansive and thus harder to categorize. He trained as a sociologist, specializing in race relations and the impact of slavery on Brazilian society, and taught that subject for many years, but many of his more than 20 books and 100-plus scholarly articles also deal with economics and political science.

“He’s unusual for a political figure in that before he was elected president of Brazil, he was also very active in the International Political Science Association,” said Alfred Stepan, a Brazil expert at Columbia University who has known Mr. Cardoso since the 1960s. “He’s also taught at Cambridge, the Sorbonne, and he came many times to Princeton, Yale and Columbia” as a visiting scholar.

After leaving office, named the best president in Brazil’s history in a poll conducted as he was departing, Mr. Cardoso joined Brown University as a professor at large. In 2008 the British magazine Prospect designated him one of the world’s top 100 intellectuals, and in 2009 Foreign Policy magazine placed him 11th on its list of top 100 global thinkers.

Mr. Cardoso’s academic career in Brazil was cut short when a military dictatorship seized power in 1964, eventually forcing him into exile in Chile, France and the United States. After returning in the 1970s he became active in politics, serving as a senator for nearly a decade and as foreign minister and finance minister before being elected president.

Mr. Cardoso is probably best known as co-writer of the influential 1969 book “Dependency and Development in Latin America,” which detected in the early glimmerings of globalization new opportunities for growth in countries considered to be on the periphery of world affairs. But he said the book he considered “most solid” is “Capitalism and Slavery in Southern Brazil,” an examination of how racially based servitude contributed directly to Brazil’s economic and social backwardness.

“He is a man who profoundly studied Brazil before governing it, taking part in all of the important intellectual debates of his time, never letting himself be limited by any one theory,” said Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Center for Scholars in Washington. “He entered politics not for traditional reasons, but for reasons of values and because he was prohibited from doing what he was originally trained to do.”

“Interest rate has been falling not to please Dilma”, says Brazil Central bank chief

The central bank remains independent and the current interest-rate cutting cycle is driven by specific economic factors, not pressure from President Dilma Rousseff, Brazil’s central bank President Alexandre Tombini said in an interview in the Sunday edition of O Estado de S. Paulo.Tombini: Brazil lower-interest rate cycle driven by “specific economic factors”

“The Selic has been falling, leading to a significant reduction in the real interest rate, because of a very specific combination of internal and external factors, and not to please President Dilma,“ Tombini said.

Tombini said policymakers are considering cutting rates below the current 9% because the global economic outlook deteriorated after the release of monetary policy meeting minutes in March, in which policy makers said the benchmark rate would fall to just above historic lows.

But the central bank president also said that if rates had to be raised again in the future, “I wouldn't hesitate. But rate hikes would start from a much lower level of real interest rates”.

“Economic cycles will always exist” Tombini said. Brazil has for many years operated at a point of equilibrium based on very high interest rates, he said. Using this opportunity to lower rates could lead the economy to a better point of equilibrium, although he emphasized it must always be anchored on central bank autonomy and a functioning inflation-targeting system.

Likewise Tombini said global growth potential may have fallen because of the effects of financial crises on the real economy, adding that Brazil’s 7.5% growth in 2010 “is well above Brazil’s potential”. He added that 4% growth in Brazil would be satisfactory, declining to give an estimate for 2012.

President Rousseff set a goal of bringing down interest rates when she first took office, and recently authorized a change in savings accounts that would allow the central bank to cut interest rates below 8.5%. There has been some criticism that she has been forcing the central bank to cut rates, even though inflation has been falling, as many economists expect price pressures to resurge later this year as the economy picks up.

In related news Estado de S Paulo reported the Brazilian government is projecting 3% growth this year after lowering expectations, according to unidentified government sources.

Government officials acknowledge the Finance Ministry’s 4.5% growth target for 2012 is no longer realistic, the Sao Paulo- based newspaper said. New measures to encourage growth may be announced starting in June, once Brazil’s first-quarter growth figures are released, the newspaper said.

May 9, 2012

Brazil Inflation This Year Remained Unchanged at 5.12 Percent


(MENAFN - Qatar News Agency) The market view for inflation in Brazil this year remained unchanged at 5.12 percent.

The Brazilian Central Bank targets inflation of 4.5 percent annually, with a tolerance range of plus or minus 2 percentage points.

The median estimate for economic growth for 2012 rose slightly to 3.23 from 3.22 percent, but analysts left unchanged their estimates for growth in 2013 at 4.30 percent.

Consumer prices were seen rising 0.58 percent in April, according to the median forecast of the central bank survey. For the next 12 months, inflation will likely be 5.53 percent, unchanged from last week's prediction.
Meanwhile, Brazilian policymakers will likely slash interest rates to record lows after changing rules for savings accounts, a weekly central bank survey of economists showed.

The country's benchmark interest rate is expected to end this year at 8.5 percent, the so-called Focus survey showed, down from last week's 9-percent forecast.

The bank survey, which tracks weekly forecasts of the most-widely watched economic indicators in Brazil, also showed analysts foresee prices climbing 5.56 percent by the end of next year compared with last week's 5.53 percent prediction.

The survey's results are the median forecast of analysts polled by the central bank at about 100 financial institutions.
 

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Tags Ytellis Global Consultancy Ytellis Brazil Inflation Brazilian Central Bank Economic Indicators

Sao Paulo and Santiago, most attractive cities in Latam for urban investment

Brazil’s Sao Paulo is the most attractive city for investments in Latin America followed by Santiago de Chile and Mexico City according to the latest results from a paper by Colombian and Chilean experts released on Tuesday in Bogotá.

The Sao Paulo leadership according to the ‘Atractividad Index for Urban Investments’ in 2012 was a joint work from the Colombian University of Rosario Centre for Competitive Strategies (Cepet) and the Business Intelligence Office IDN from Chile.

Cepet and IND have been jointly developing the index and rankings since 2010 referred to the Latin American urban centres most attractive and with best climate for investment.

The Brazilian megapolis ranked first because of its amiable climate, size of the economy, strength of higher education, volume traded in the stock exchange and the presence of the world’s largest multinational corporations, according to the report.

Sao Paulo displaced Santiago de Chile which ranked top of the list in 2011, and fell to second place this year, in spite of the fact that IDN continues to rate Chile as the most competitive country in Latin America because of its urban infrastructure and low crime, among other conditions.

Mexico City follows with a strong domestic market, while Lima ranks fourth and Bogotá fifth. The following positions are occupied by Porto Alegre (Brazil); Rio do Janeiro; Monterrey (Mexico), Buenos Aires and Belo Horizonte (Brazil).

Cepet Director Saul Pineda and IDN CEO Rodrigo Diaz underscored the predominance of Brazilian and Mexican cities among the ten leading places in the 2012 index.

This can be explained because of “the importance of the national environment and the size of the market when investors at the moment of making decisions are looking for alternatives”.

Nevertheless since in the top twenty figure eight Brazilian cities this is supported on the fact the country is the largest economy in Latin America and seventh at global rating. Mexico ranks as the second largest economy in the region. 
 

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Tags Ytellis Ytellis Global Consultancy San Paulo Santiago Latam Urban Investment IDN Cepet Saul Pineda Rodrigo Diaz Global Rating Economy

Spanish bank forecasts average growth of 4% for Argentina and the region in 2012

The Argentine economy is set to grow 4% this year in line with the rest of the countries of the region according to a report, “Global Situation” from the Spanish-Argentine bank BBVA-Francés.

Brazil however is expected to apply a policy to weaken its currency and improve competitiveness

The report forecasts a soft landing for the Argentine economy as for the rest of the region while the average inflation for the main economies, Argentina, Brazil, Chile, Colombia, Peru and Venezuela is expected to be in the range of 9.3% in 2012.

“The inertial characteristics of the region won’t allow significant improvements in an environment of high prices for commodities, which limits the reach of expansive economic policies in those countries with inflation targets”, adds the report.

The “Global Situation” estimates the world economy will advance 3.6% this year and 4% the following, boosted by emerging economies, particularly from Asia and Latin America.

“With the exception of Brazil monetary policies will overall have a cautious restrictive approach and it is expected that currencies on the whole region will continue to be appreciated. Brazil on the other hand will implement a more accommodative monetary policy”, concludes the report’s chapter on the evolution of the economy in the region for this year. 

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Tags Brazil Argentine Economy Chile Colombia Peru Venezuela BBVA Ytellis Global Consultancy Ytellis

May 6, 2012

Brazil Seeks Biofuel Exports to Spain as Argentina Barred

Brazil Seeks Biofuel Exports to Spain as Argentina Barred

Bloomberg News

By Stephan Nielsen on May 04, 2012

Brazilian biodiesel producers are seeking export agreements with Spanish oil companies after the European country moved to cut off imports of the renewable fuel from Argentina.

Erasmo Carlos Battistella, president of the biofuel trade group Associacao dos Produtores de Biodiesel do Brasil, will discuss the issue at a meeting today with Spain’s ambassador in Brasilia.

Spain is cutting trade ties with Argentina after the South American country said it would seize control of YPF SA (YPFD) from the Spanish energy company Repsol YPF SA. (REP) That’s creating a market for Brazil’s biofuels industry, Battistella said.

“It’s opened up a major export opportunity” for Brazilian producers, he said in a telephone interview today. “Argentina was a big supplier there.” He expects trade contracts to be signed within three months.

Spain revised an incentive program last month to exclude biofuels produced outside Europe from meeting government requirements for using renewable fuel. That effectively blocked imports from Argentina and other nations in the region. Battistella will ask that Brazil be included on the list of approved suppliers.

Brazil’s biodiesel plants have annual production capacity of 6.94 billion liters (1.83 billion gallons). Of that, 15 factories with 4.59 billion liters of capacity have been approved for exports, Battistella said. Spain purchased 1.87 billion liters of biodiesel from Argentina in 2011.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Tags Brazil Biofuel Export to Spain Argentina Ytellis Ytellis Global Consultancy Bloomberg