São Paulo 2015 Blog: Panel on the Business Environment in Brazil
Experts discussed which industries have the greatest potential for growth, such as technology and railway transportation.
- José Décurnex, General Manager, IBM Latin America
- Patrice Etlin, Managing Partner, Advent International Corporation
- Gilberto Peralta, President & CEO, GE Brazil
- Rodrigo Santos, President, Monsanto Brazil
- Hélio Magalhães, City Country Officer, Brazil (moderator)
Amid Brazil’s economic downturn, experts outlined the country’s potential for growth and the opportunities in business and investment sectors. IBM’s José Décurnex opened the second panel emphasizing that both the government and the private sector should work together to overcome the barriers in technology. “Investment in technology in Brazil is only 2 percent of its GDP, in comparison to the United States or Europe where it stands at 4 to 5 percent,” he pointed out. Greater investments in the “big data” technological revolution will transform the country’s agricultural landscape, explained Monsanto’s Rodrigo Santos. The so-called agricultura de precisão (precise agriculture) would double production and enhance competitiveness by allowing farmers to gather data and arrive at best solutions, which can pave the way toward achieving sustainable agriculture. Technology can also aid at connecting the government with citizens; “We have to do away with bureaucracy in order to have a direct relationship with citizens,” said Santos.
— Fernanda Tesore (@fetesore) May 27, 2015
Another critical point is that Brazil will have to meet the global demand for commodities in the next years by doubling its production. “While 9 percent of Brazil’s land is used for agriculture and 64 percent is forest or reserved land, the United States uses 20 percent of its land for agriculture,” said Santos. “However, Brazil has increased its agricultural productivity by 240 percent.” Given its potential, the country can become a major player in agribusiness. The demand for agricultural products will continue upward due to trade with China, with a big opportunity lying in the production and export of Soya.
For General Electric’s Gilberto Peralta, it’s important to fix infrastructure. There’s a need to pave roads and improve transportation, specifically the country’s railways to reduce costs on products delivery, he said. The government should also correct the problem of the lack of water as a means to reduce health costs. Last year, 460,000 people were hospitalized due to water shortages; “For every dollar invested in the treatment of sewage, $4 are saved in healthcare costs,” said Peralta. But the most vital investment is in education, particularly encouraging the educated Brazilian diaspora to return and apply knowledge back home, Peralta concluded.
— Caroline Gibin (@cagibin) May 27, 2015
Advent International Corporation’s Patrice Etlin added that despite the economic crisis, this is an interesting moment for investors in Brazil, saying: “Long-term investors have a positive vision in the country as a great opportunity.” Etlin cited healthcare as an area that has enormous investment possibilities.
In final remarks, Citi’s Hélio Magalhães admitted the country is undergoing three distinct crises for the very first time: economic, political, and in the business world, resulting in the lowest level of trust in years. However, he is optimistic that both inflation and the Central Bank’s interest rate would be reduced by the end of this year, which can put the country in a better position for 2016—a “glass half-full” scenario for Magalhães. “By the end of the second trimester, we will see a more favorable scenario for the economy away from the 4.5 percent inflation target,” he said.
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