Brazil Market Update and Opportunities in Infrastructure , 2014 - - PowerPoint PPT Presentation

Brazil

Market Update and Opportunities in Infrastructure , 2014 FIFA World Cup, & 2016 Rio Olympic Games

Greg Wallis Consul-General & Trade Commissioner Australian Trade Commission São Paulo, Brazil 28 March 2011

Brazil Overview & Update

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Images

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Brazil has a combined geographic size, population and economy shared by

• nly the USA and other BRICs

Reality

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Why Brazil?

• 29 million new consumers in past 8 years; 2/3 Brazilians now middle/upper classes
• World’s 7th biggest economy (recently overtaken Italy; soon to overtake UK and France)
• Stable and growing: 7.5% growth in 2011; 4.6% predicted for 2011
• No. 1 global exporter and/or producer of sugar, coffee, orange juice, ethanol, iron ore,

soya beans, chicken, beef

• World’s largest unused arable land
• Rated 3rd most attractive investment destination by UNCTAD
• 2 major factors that define Brazil today vs. yesterday:
• Consistent long-term decline in interest rates, which has stabilized businesses and

established a long-term business culture

• Consistent decline in income inequality
• Consumers have an increasing capacity to purchase imported goods coupled with an (until

recently) unprecedented access to credit. Auto financing, home mortgages, credit and debit cards are penetrating previously "unbanked" sectors of society

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Main Growth Drivers

• Changing demographic – rising middle class
• Global demand for commodities, especially China
• Growth Acceleration Programme (PAC) – launched in 2007 (R$ 500billion). PAC

2 calls for an even larger combined public and private investment of almost R$1.6 trillion to 2020. Massive investments in energy, transportation

• FIFA World Cup 2014 and 2016 Olympic Games

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Current Australian Exports/Investments in Brazil

• Currently some 430 Australian merchandisers export to Brazil
• 55 Australian companies established in Brazil

– Pacific Hydro’s $160 million wind power investments in NE Brazil – BHP Billiton, Mirabela, Troy Resources, and 11 other juniors have investments in gold, iron ore, bauxite, oil and gas – Nufarm has a $350 million investment in crop protection products – Wellard and Sanger have both invested in Brazil to produce meat for global markets – QBE provides micro insurance – Populous involved in the master plan design of Natal Soccer Stadium for 2014WC – MI Associates has contracts with Rio 2016 Organizing Committee for Organizational Consultancy, Games Foundation Plan and National Olympic Training Centre

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Political Update

• New Dilma administration is generally agreed to

have made a promising start, with a business focus and reining in of spending (restricted minimum wage rise)

• Foreign policy move towards closer relations with

USA

• Recognized importance of delivery of successful

World Cup & Olympics

• Efficient administrator, not charismatic leader
• Challenges:

– can she manage her coalition? – can she effect political and taxation reforms – can she make public services more efficient, cost- effective and responsive to the needs of the population? – can she manage an overheated economy?

• Overriding message - continuity

Infrastructure

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Brazil’s Infrastructure Challenges

• Road, Rail and Metro transportation
• Airports
• Ports
• Sewage systems
• Water management
• Solid waste management
• Power
• Information and Communication Systems

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Plan of Accelerated Growth 1 (PAC1)

• Recognition that infrastructure in Brazil is inadequate and that needs

extend beyond what is required for the World Cup & Olympics

• A federal government program with planned investment of around R$

500 billion between 2007 and 2010.

• The priorities were sanitation, housing, transportation, energy, power

and water resources, among others.

• The final assessment of the PAC1’s performance, made by the federal

government, indicates that 88% was carried out at a cost of R$ 444 billion.

• R$115 billion was spent in the Oil & Gas sector

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PAC2

• Introduced in 2010, investments of $R959 billion between 2011 and 2014 and

$R1.59 trillion in total

• Sectors

Improving our Cities R$57.1 billion Citizen Community R$23 billion My Home, My Life R$278.2 billion Water and Electricity for All R$30.6 billion Transportation R$104.5 billion Power R$465.5 billion TOTAL R$958.9 billion

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Rio-São Paulo High Speed Train

Olympics & World Cup

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The 21014 FIFA World Cup and 2016 Rio Olympics is an opportunity for Australia and Brazil to build relationships at a number of levels because of the perceived expertise of Australia in both the preparation and management of the games, and as an Olympic sporting power.

Australian Sports Events Expertise

Khalifa Stadium, Doha “Watercube”, Beijing Olympics Etihad Stadium, Melbourne

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Upcoming Sports Events in Brazil

2011 2013 2014 2015 2016

Military Games Confederations Cup World Cup Copa America Olympic Games

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2014 FIFA World Cup Brazil

• The 2014 World Cup will be conducted in 12 Brazilian cities in the five

geographic regions.

• Public works projects of some US$59 billion are planned in order to

develop the necessary infrastructure (stadiums construction, transport system, roads & highways, airports, electric power network expansion, telecommunication networks, water & waste) in addition to contracts for the staging of the event.

• Biggest challenge: Airports

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Host Cities – Infrastructure Investment

US$ 1.7 bi US$ 3.2 bi US$ 2.9 bi US$ 2.4 bi US$ 4.7 bi US$ 5.6 bi US$ 8.8 bi US$ 3.9 bi US$ 3.4 bi US$ 0.9 bi US$ 2.6 bi US$ 19.3 bi

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Investments by type

Sector US$ Million Responsibility Urban Mobility 35,042 States & Municipalities Airports 3,938 Federal Ports 425 Federal & Private Sector Electric Energy 1,530 Federal Basic Sanitation 7,139 Federal Hotels 7,256 Private Sector Hospital 674 Federal Security 720 Federal Stadium/Arenas 3,111 States & Municipalities / Private Sector Total 59,839

Source: ABDIB – Brazilian Association of Infrastructure and Basic Industries

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Sustainability in the World Cup 2014

FIFA and the Local Organising Committee (COL) of the Brazilian Football Confederation (CBF) have decided that the World Cup 2014 should be the “Green Cup” Consequently, all stadium projects (new and remodelled) are being designed in accordance to sustainability guidelines, including:

• Recycling and use of demolition materials;
• Permeable flooring and roofing throughout the complex;
• Green roofing;
• Use of solar panels for harnessing energy;
• Use of efficient lamps and energy-efficient equipment;
• Rainwater collection; storage and re-use;
• Material specifications taking into account sustainability criteria;
• Waste management during construction and throughout the arena’s life

cycle.

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2014 World Cup Stadiums Overview

Investments needed in all of the 12 selected cities. The bids related to the public arenas are structured in two different models:

• 5 Public-Private Partnerships (PPP)
• Mineirão Complex – Minas Gerais
• Fonte Nova – Bahia
• Castelão Stadium – Ceará
• Arena Recife – Recife
• Dunas Arena – Rio Grande do Norte
• 4 Public Arenas to be operated by public authorities
• Amazonas Arena – Amazonas
• Pantanal Arena – Mato Grosso
• Maracanã – Rio de Janeiro
• Mané Garrincha – Brasília
• 3 Private Arenas
• Corinthians Arena – São Paulo
• Beira Rio – Rio Grande do Sul
• Baixada Arena – Paraná

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Decision Making

2014 FIFA World Cup Organising Committee

• The overarching structure that is liaising with the 12 host city
• rganizing committees.
• It reports to FIFA headquarters and it is responsible for delivering

the World Cup. Host City Work Groups (Local Organizing Committees)

• State and Municipality authorities that will be responsible for

procurement and to deliver the event in each city.

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• First South American host in the history of the Games has generated

great popular support and enthusiasm

• Three levels of Government working together
• Games staged in four clusters around the city (Barra, Deodoro,

Maracana and Copacabana). 11 permanent and 4 temporary sport installations will be constructed plus modernization of existing ones

• A BRT (Bus Rapid Transport) system will be implemented in the city to

connect the planned clusters as well as modernization and extension of metro lines

• Main driver/concern: Urban Legacy

Rio 2016 Olympic Games

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Rio 2016 – Olympic Clusters & Sports Venues

Existing 54% Temporary 20% Additional (New) 26%

Barra Deodoro Copacabana Maracanã

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Investments by type

Source: ABDIB – Brazilian Association of Infrastructure and Basic Industries

Sector US$ Million Airport & Port 1,001 Highways & Railways 4,451 Accommodations 56 Sports Facilities (Competition & Training) 490 Olympic Village 427 Barra Media Village 812 Electricity Infrastructure 770 Environmental Management Systems 1,205 Health 10 Security 813 IBC/MPC 203 Urban Legacy 820 Total 11,059

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Olympic Games Organizational Structure

Rio 2016 - Local Organising Committee

• Equivalent to 2000 SOCOG; responsible for games organization and
• perations

Olympic Public Authority (APO)

• Equivalent and inspired in the London ODA – just created and to be

headed by Henrique Meirelles (ex President of Central Bank). Peak

• rganization for delivery of the Olympic Games

Brazil 2016

• Procurement body and operational arm of the APO, for contract co-
• rdination & procurement

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• APO interacts with all

government institutions (3 levels: Federal, State and City)

• Procurement of non-

Olympics specific infrastructure also done at 3 levels of government

IOC / IPC Rio 2016 APO GOV

Brazil 2016

Games Organizational Structure

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Opportunities for both events

• Master planning and project management
• Urban infrastructure improvements - legacy planning
• Design, development and construction of venues and related games

infrastructure

• Overlay – temporary venues, modifications to existing venues and

temporary requirements for operations

• Games services, accessibility, catering, cleaning and waste
• Games management, planning and coordination, training staff and

volunteers

• ICT – technology operations and telecommunication
• Transport (air, road, rail, metro), accommodation and service

infrastructure

• Major event security and risk management

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Opportunities for both events

• Arena Management
• Branding, communication & marketing
• Environmental consultancy
• Security consulting (crowd control and risk management)
• Delegations’ accommodation planning
• Opening and Closing Ceremonies

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Other Infrastructure Projects

• In addition to funding allocated under the PACs and projects planned

for the World Cup & the Olympics, states in Brazil have their own infrastructure investment programs

• In Sao Paulo alone, there are currently R$22bn worth of PPP

infrastructure projects underway or planned in the next few years

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• Brazil is undergoing an unprecedented period of

investment in infrastructure

• Much of this is related to the World Cup and Olympics,

but there is also the PAC2 and states’ programs

• Project opportunities range from PPP engagement level

down to the “nuts and bolts” of specific technologies for a wide range of sectors including construction and transportation

• Key contacts may be engineering companies, Rio 2016,

Brazil 2016 or host city authorities – we can help identify

• Most World Cup stadium design and refurbishment

contracts already let but many opportunities remain

Key Messages

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• Oversized and convoluted tax system
• Distorted labour market
• Poor educational system
• Slow judicial system and bureaucracy
• Weak infrastructure
• Low “Ease of Doing Business” ranking

…but the market is huge, growing, and becoming more accessible every year, and foreign companies are welcome and successful

Brazil Challenges Still Remain

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Planned Activities: 2011/2012

Austrade and ally government and industry bodies are planning several activities (including trade missions; networking events; seminars) to engage Australian companies and Brazilian public and private entities:

• SportAccord International Convention (London 3-8 April 2011)
• Rio’s Mayor Visit to Australia (TBD)
• Business Club Australia (London 2012 Olympic Games)
• Visit of Minas Gerais State Government 2011

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For latest news and updates on the procurement processes please access: www.brazil2014-rio2016.com To register your interest please access: www.brazilgames.icn.org.au

Register your interest!

Austrade is working closely with allies (including ICN, AISES, ALABC and ABCC) in developing contacts with a wide range of Brazilian companies and

• rganisations with a connection to the World Cup and the Olympics.

We are keen to promote specific Australian capability, and would be interested to receive profiles from relevant Australian suppliers since our aim is to present portfolios of specialist capability to clusters of related contacts.

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Austrade – Contact Details in Brazil

Greg Wallis Fabio Nave Consul General & Trade Commissioner Business Development Manager Tel: +55 11 2112 6222 Tel: +55 11 2112 6212 E-mail: greg.wallis@austrade.gov.au E-mail: fabio.nave@austrade.gov.au

www.austrade.gov.au/2014-Brazil-FIFA-World-Cup-and-2016-Rio-Olympic-Games/default.aspx

For more information please access:

Thank you!

Greg Wallis Consul-General & Trade Commissioner Australian Trade Commission São Paulo, Brazil greg.wallis@austrade.gov.au