São Paulo – Brazil must do its homework in multiple aspects of its economy if it is to keep attracting foreign investment. This was the take-home point from the s of Brazil Summit, a conference on the future of Brazil’s economy held by British magazine The Economist this Thursday (24) in São Paulo.
Investment in infrastructure – especially mobility and sanitation –, education & sustainability, and tax & social security reforms came up in several s throughout the morning.
Former Finance minister Joaquim Levy (pictured above on the big screen) said a concerted effort must be undertaken to simplify tax procedures in the country. “This simplification work is a job of the whole society. The only way we’ll achieve a more just, agile and simple country will be through a tandem effort by the judiciary, the government and the private sector,” the economist said in the first of the day, Leading For the Long Haul – Shared Prosperity.
Levy also said the ongoing ideological battle regarding the environment does not affect the private sector. “The political noise isn’t a problem. Our entrepreneurs [in agribusiness] are too mature for that,” he argued, while discussing sustainable agriculture.
During the same , CEO Marcos Lutz of private conglomerate Cosan said “serious projects will find their way to capital abroad as well as domestically,” and that Brazil has “infrastructure development needs.” He mentioned basic sanitation as a strategic long-term investment. He also said processes for business owners must be made simpler. Lutz named privatizations, concessions and public-private partnerships as ways to get the market to finance infrastructure projects.
Santander chief economist Ana Paula Vescovi concurred. “Infrastructure plays a two-pronged role of inducing long-term growth and productivity. Investment in mobility leads to efficient travel, access and social wellbeing, and sanitation reduces social inequality and healthcare spending, apart from minimizing environmental impact. We can’t get caught in the trap of growing and developing without looking after people,” he said.
The second , The Economic Outlook, addressed tax and social security reforms. Verde Asset Management chief economist Daniel Leichsenring said a “comprehensive tax reform would lower the tax-related risks of investing in Brazil,” and stressed that “the focus must be on education and human capital in the long term.”
XP Investimentos chief economist Zeina Latif claimed that some specific rules and exceptions will need reviewing in order for a tax reform to come to . She also said the government must do some serious communication work on that end. Regarding the pension reform, Latif said “it’s really important to turn the page in the political agenda so we can move forward with other subjects.” According to Latif, “setting priorities and making wide-ranging reforms is key.”
The ’s inquired how “political turmoil and noise affect business owners.” Latif said she doesn’t see much concern about the noise. “Business owner confidence [in Brazil] isn’t that great, but it’s improving,” she said. She also said investment in education must be a priority in order for skilled labor to be available.
Arthur Carvalho, chief economist with Morgan Stanley Latin America, said “overseas confusion breeds some distrust in foreign investment, but since Brazil is a closed-off economy, the external crisis does not impact the market that much.”
Hypothetically
The third was themed The World If…, with hypotheses about the future of the world economy and how they might affect Brazil. Oliver Wyman partner Ana Carla Costa said that although global recession could affect Brazil, “we can fix up the engines of domestic growth. I believe in a simplified tax reform, not a comprehensive one. The scenario is still one of cautious optimism, with a growth estimate of up to 2%,” she said.
Regarding the eventuality that Donald Trump might lose the election next year, Eurasia Group managing director for the Americas Christopher Garman said “maybe the Brazil-US agenda will be put in the backburner. Some of the gains that otherwise would be had may not come to , but despite the Trump-Bolsonaro connection, what we have in the agenda right now isn’t that big of a change.”
Regarding the election scenario in Argentina, Ana Carla said the Mercosur might lose traction in case Kirchnerism makes a comeback. There are specific agreements to be reached. There’s a lot of room for expanding the trade agenda. We need to do our homework,” she said.
As for the popular uprisings in Chile, Bolivia and Ecuador, ists said there’s a risk that the same could happen again in Brazil, but some argued that there’d also be “pro-government demonstrations,” since society is so polarized right now. “The fuel for the rebellion is there. The reasons for so-called new middle-class discontentment – education, safety and healthcare – haven’t improved since 2013,” said Garman.
Environment
Earth’s Greatest Forest – A Future for Amazonia was the fourth in the conference, addressing deforestation, invasion of public lands and mining in indigenous territories, and the ways in which corporations and society can work for sustainable development.
WWF-Brasil CEO Mauricio Voivodic said that in the last twelve months, Brazil’s environmental image took a turn for the worse. “The Brumadinho disaster, forest fires and now the oil spill in the Northeast all take away from society, and not the government. It doesn’t bode well with foreign investors. International agreements might be terminated, and there could be a boycott from foreign businesses,” he said.
Fama Investimentos founder Fabio Alperowitch said it’s a myth that sustainable investment is less profitable. “Ninety percent of studies show that it’s more or just as profitable, and sustainable investment is not as risky as unsustainable investment.” In his opinion, although subjects like sustainability and human rights have become completely polarized, they matter to the whole of society. “We need to bring the financial market into these discussions, which are of the utmost relevance to everyone.”
Former Environment minister Marina Silva also sat on the . She mentioned a USP study according to which 70% of South America’s economy depends on rainfall in the Amazon. “Agribusiness can make a difference in the region, because deforestation is bad for business. We need to create certification of origin, and consumers need to demand ethics, social responsibility and respect towards indigenous populations, more than just technical and sanitary quality.”
Afternoon Brazil Summit s featured Justice minister Sergio Moro and former attorney-general Raquel Dodge, among other speakers. For the full program, please refer to the event’s website. The Arab Brazilian Chamber of Commerce ed the event, and its member companies got discounts. The Chamber’s Marketing and Strategy director Janine Bezerra de Menezes, Market Intelligence manager Ana Becker and director diretor Daniel Hannun were in attendance.
Translated by Gabriel Pomerancblum
