Corporations See Brazil as a Hub for Profitable Investments, Now and in the Future
Rising out of a recession, today’s Brazilian economic market and digital commerce are even more ideal for international companies than they’ve been in the past. It’s never been a bad idea to invest in Brazil. As Latin America’s first economy, Brazil has long had a reputation as being both an excellent location for corporations to do business. But the country is also known being a fairly difficult place to work; concerns revolve around the complex tax laws, and physical transport is a challenge due to the difficult to navigate geographical terrain.
Still, in 2019 major companies like Amazon, Novelis, and FIS, are choosing to invest in Brazil. The reasons for this are numerous; some are based on the traditional advantages Brazil has held for some time, and other reasons include new practices and enticements.
Karl Sauvant, of Columbia University’s Center on Sustainable Investment, is an expert on foreign investment, provided insight into these concepts, as he believes Brazil is a hub for great investments, past, present, and future.
The invest in Brazil fad isn’t new
First and foremost, Brazil is a large and a high-quality market. That alone makes it a place where corporations want to work. More people who are able to contribute are critical for any corporation. But not only that, according to Sauvant, Brazil’s high-quality infrastructure is a huge reason that people want to invest in the Brazilian market. “This principle investment is very favorable, as far as Brazil is concerned,” he says. In other words, investing in Brazil now allows corporations to take advantage of a growing economy that will only benefit a company in the future.
This concept isn’t new. Sauvant explains that for the past five years, Brazil has been thriving. He says the country went from $50 billion in investment, up to $70 billion of investment in 2014. For the second year in a row, investing experts rank Brazil as one of the top emerging markets around the globe in 2019. So Brazil’s sudden popularity isn’t so sudden – this interest has been building for some years.
Political-Economics in Brazil – Will Bolsonaro Help or Hinder?
While the new President Bolsonaro has certainly stirred up Brazil, Sauvant doesn’t believe the new leader’s policies have triggered any potential changes from an economic standpoint. This view is shared by other experts as well, since Bolsonaro is “market-friendly.” All good things from an international investment standpoint. That’s a green light for companies to move ahead.
In fact, that Bolsonaro has promised to clean up the corruption that festers in the country, is yet another reason for corporations to invest in Brazil. There’s less mess to worry about, and that’s a big draw. “From an international perspective, the cleaner the system, the better it is. Otherwise it would be factored in as a cost, and that, of course, is not a good thing,” says Sauvant.
Why Brazil Attracts big Corporations
According to Sauvant, large companies “account for most of the foreign investment taking place in Brazil.” This isn’t surprising, but Sauvant stresses that smaller and medium companies are also very important.
What’s critical is Brazil’s part in the World Trade Organization (WTO), and this is probably the most important aspect as to why medium companies are interested in expanding to Brazil. As a Co-Leader in the organization, “their (Brazil) investment in an international agreement in foreign investment facilitation is, of course, a very good signal to international investors.” This agreement would have an effect in expediting investment into Brazil further. That’s a huge item for small and medium companies – this is the future. Now these companies have representation and aid. Encouragement and guidance eliminates one of the biggest hurdles surrounding business investment in Brazil. With that issue out of the way, economic and market growth have even higher potential.