OPPORTUNITIES, PITFALLS AND TENDENCIES IN TRADE AND INVESTMENTS - - PowerPoint PPT Presentation

▶
opportunities pitfalls and tendencies in trade and
SMART_READER_LITE
LIVE PREVIEW

OPPORTUNITIES, PITFALLS AND TENDENCIES IN TRADE AND INVESTMENTS - - PowerPoint PPT Presentation

Apr 29, 2023 346 likes •887 views

OPPORTUNITIES, PITFALLS AND TENDENCIES IN TRADE AND INVESTMENTS BETWEEN BRAZIL AND THE NETHERLANDS AND INFLUENCES ON NEIGHBORING COUNTRIES Poultry and Egg Summit Latin America 2016 Buenos Aires October 26-27 Hans Mulder Managing Director

slide-1
SLIDE 1

OPPORTUNITIES, PITFALLS AND TENDENCIES IN TRADE AND INVESTMENTS BETWEEN BRAZIL AND THE NETHERLANDS AND INFLUENCES ON NEIGHBORING COUNTRIES

Poultry and Egg Summit Latin America 2016 – Buenos Aires – October 26-27

Hans Mulder Managing Director – Dutch Brazilian Chamber of Commerce

slide-2
SLIDE 2

About Dutcham: The Dutch Brazilian Chamber of Commerce is a non-profit Association in accordance to Brazilian laws, founded in 1952, with the objective to promote and assist trade and investments between Brazil and the Netherlands, committed to the concept of open and competetive market economies, respecting social and environmental sustainability.

slide-3
SLIDE 3

About Dutcham: The Dutch Brazilian Chamber of Commerce is a non-profit Association in accordance to Brazilian laws, founded in 1952, with the objective to promote and assist trade and investments between Brazil and the Netherlands, committed to the concept of open and competetive market economies, respecting social and environmental sustainability. About myself:

  • London School of Foreign Trade – Morley College
  • Living in Brazil since 1987 (Buying agent for Dutch industry)
  • MD for Dutcham since 1990
  • Managing Parter of Staffing Serviços & Assessoria Ltda since 1998
  • Attorney-in-Fact for several Dutch Multinationals in Brazil
slide-4
SLIDE 4

Trade and Investments between Brazil and The Netherlands:

  • Myth Maurício de Nassau...
slide-5
SLIDE 5

Trade and Investments between Brazil and The Netherlands:

  • Compare size
  • Netherlands:

GDP US$ 763 B World economy #17 Income per Capita US$ 43.603

  • Brazil:

GDP US$ 1.535 B World economy #9 Income per Capita US$ 8.670

slide-6
SLIDE 6

Trade and Investments between Brazil and The Netherlands:

  • Distortions and misinterpretations of statistics about trade:

Export destinations read source of payment. So: - The French company Alstom selling trains to Brazil via its Dutch holding company reads Dutch exports, even if the equipment never passed by The Netherlands

  • A German company buying shoes in Brazil and the container enters the

EU in Rotterdam does NOT read Dutch import

slide-7
SLIDE 7

$- $50.000.000.000,00 $100.000.000.000,00 $150.000.000.000,00 $200.000.000.000,00 $250.000.000.000,00 $300.000.000.000,00 2000 2002 2004 2006 2008 2010 2012 2014 Total From EU From NL

Brazilian Imports 2000 – 2015

(2015: Total: US$ 171 Billion, whereof US$ 2 Billion from The Netherlands)

slide-8
SLIDE 8

$- $50.000.000.000,00 $100.000.000.000,00 $150.000.000.000,00 $200.000.000.000,00 $250.000.000.000,00 $300.000.000.000,00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total To EU To NL

Brazilian Exports 2000 – 2015

(2015: Total: US$ 191 Billion, whereof US$ 10 Billion to The Netherlands)

slide-9
SLIDE 9

Trade and Investments between Brazil and The Netherlands:

  • Distortions and misinterpretations of statistics about trade:

Export destinations read source of payment. So: - The French company Alstom selling trains to Brazil via its Dutch holding company reads Dutch exports, even if the equipment never passed by The Netherlands

  • A German company buying shoes in Brazil and the container enters the

EU in Rotterdam does NOT read Dutch import

  • Distortions and misinterpretations of statistics about investments:

Direct Foreign Investments read investors registered at the Brazilian Central Bank. So: - Local generic growth of a company like Philips (in Brazil since 1924) is NOT included

  • DAF Trucks building a factory in Brazil with funds from its North

American mother company Paccar is USA investment, not Dutch.

slide-10
SLIDE 10

Trade and Investments between Brazil and The Netherlands: Dutch total Foreign Direct Investment in the world at year-end 2014 (stock) US$ 1.074.000.000.000. (over one trillion in American English) Dutch FDI in Brazil at year-end 2014 (stock) US$ 13.944.000.000. (nearly fourteen billion in American English) Brazilian total Foreign Direct Investment in the world at year-end 2014 (stock) US$ 181.000.000.000. (One hundred eighty one billion in American English) Brazilian FDI in The Netherlands at year-end 2014 (stock) US$ 295.000.000. (Two hundred and ninety-five million in American English)

slide-11
SLIDE 11

Trade and Investments between Brazil and The Netherlands:

  • Distortions and misinterpretations of statistics about trade:
  • Distortions and misinterpretations of statistics about investments:

Conclusions: 1) Statistics, albeit full of distortions, better refect the actual commercial relationships than the logistic flow of goods, as often believed. 2) The Dutch economy is very dependent on other countries, whereas the Brazilian economy is not.

slide-12
SLIDE 12

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production

slide-13
SLIDE 13

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational

slide-14
SLIDE 14

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational 1980 Formation of cartels and monopolies hampering further development

slide-15
SLIDE 15

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational 1980 Formation of cartels and monopolies hampering further development Opening of the market with gradual reduction of import duties 1990 Industrial recovery run with modernization of production means

slide-16
SLIDE 16

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational 1980 Formation of cartels and monopolies hampering further development Opening of the market with gradual reduction of import duties 1990 Industrial recovery run with modernization of production means Currency valuation (Real) and open market 1996 Import of luxury items – Negative trade balance

slide-17
SLIDE 17

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational 1980 Formation of cartels and monopolies hampering further development Opening of the market with gradual reduction of import duties 1990 Industrial recovery run with modernization of production means Currency valuation (Real) and open market 1996 Import of luxury items – Negative trade balance Currency devaluation 1999 2000 2001 Drop in imports of luxury items Further development of local industry Modest start of exports of manufactured goods

slide-18
SLIDE 18

Trade and Investments between Brazil and The Netherlands:

Time-line of the roller coaster: Situation: Period: Consequences: Economy largely dependent on agricultural production and exports of commodities Pré-1974 Modest industrial development and many imports of cheaper outdated products or machinery for local production “Similarity” restrictions on imports 1974 Accelerated development of local industry, mainly multinational 1980 Formation of cartels and monopolies hampering further development Opening of the market with gradual reduction of import duties 1990 Industrial recovery run with modernization of production means Currency valuation (Real) and open market 1996 Import of luxury items – Negative trade balance Currency devaluation 1999 2000 2001 Drop in imports of luxury items Further development of local industry Modest start of exports of manufactured goods Lula administration – focus on social development 2002 and

  • nwards

Better income distribution triggers industrial production, albeit not internationally competitive

slide-19
SLIDE 19

ECONOMIC GROWTH VS. SOCIAL DEVELOPMENTS

slide-20
SLIDE 20

ECONOMIC GROWTH VS. SOCIAL DEVELOPMENTS

  • Brazilian development 2002 – 2014 based on the improvement of income

distribution rater than GNP growth

slide-21
SLIDE 21

ECONOMIC GROWTH VS. SOCIAL DEVELOPMENTS

  • Brazilian development 2002 – 2014 based on the improvement of income

distribution rater than GNP growth: 40 million people relieved from absolute poverty > New Unilever factories > Dutch suppliers of machinery > More transport demand > new DAF truck factory > DAF Truck suppliers > and so on

slide-22
SLIDE 22

ECONOMIC GROWTH VS. SOCIAL DEVELOPMENTS Income distribution: As we imagine: Brazilian reality before: Brazilian reality after:

GNP = Economic Growth = Surface total Social Development = Shape and constitution of society

slide-23
SLIDE 23

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
slide-24
SLIDE 24

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
  • Clashes of ideology– strong opposition to PT labor party
  • “Mensalão” corruption scandal
slide-25
SLIDE 25

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
  • Clashes of ideology– strong opposition to PT labor party
  • “Mensalão” corruption scandal
  • Boycott of President Dilma by parliament
slide-26
SLIDE 26

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
  • Clashes of ideology– strong opposition to PT labor party
  • “Mensalão” corruption scandal
  • Boycott of President Dilma by parliament
  • “Lava Jato” investigations involving all parties
slide-27
SLIDE 27

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
  • Clashes of ideology– strong opposition to PT labor party
  • “Mensalão” corruption scandal
  • Boycott of President Dilma by parliament
  • “Lava Jato” investigations involving all parties
  • Dragging impeachment procedures
  • Unpopular interim management
slide-28
SLIDE 28

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Until 2014 economy basically sound
  • Clashes of ideology– strong opposition to PT labor party
  • “Mensalão” corruption scandal
  • Boycott of President Dilma by parliament
  • “Lava Jato” investigations involving all parties
  • Dragging impeachment procedures
  • Unpopular interim management
  • Ongoing investigations via popular pressure
  • Ongoing investigations via independent Federal Police
  • Ongoing investigations via new tools and instruments
slide-29
SLIDE 29

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Negative:

i) Political instability damages both economic growth and social development ii) Situation likely to continue until next federal elections

slide-30
SLIDE 30

POLITICAL CRISES VS. ECONOMIC CRISIS

  • Negative:

i) Political instability damages both economic growth and social development ii) Situation likely to continue until next federal elections

  • Positive:

i) Corruption fighting will go on ii) Federal elections will take place in 2018 iii) Many investments are postponed, not canceled iv) Quick recovery of development is possible after new political stability v) Good investment opportunities

slide-31
SLIDE 31

SCENARIOS AND CONSQUENCES

slide-32
SLIDE 32

SCENARIOS AND CONSQUENCES

Conservative – Liberal leadership focusing Leadership focusing on social development:

  • n macro-economic developments:

Less money for social programs Continuity of social programs Less money for culture, education, and Growing access to public education, culture, public healthcare and public healthcare Fiscal austerity for all citizens Fiscal relief for smaller contributors Privatizations Protection of state owned companies Incentives for exports Incentives for local market development

slide-33
SLIDE 33

SCENARIOS AND CONSQUENCES

Conservative – Liberal leadership focusing Leadership focusing on social development:

  • n macro-economic developments:

Non tariff barriers against imports Non tariff barriers against imports Corruption fighting (through public Corruption fighting (through public pressure and new instruments) pressure and new instruments)

slide-34
SLIDE 34

SCENARIOS AND CONSQUENCES

Conservative – Liberal leadership focusing Leadership focusing on social development:

  • n macro-economic developments:

Less BNDES finance = less need for local Continuing BNDES finance = continuing production or assembly need for local production or assembly Little growth for consumption related Continuation of growth related demand demand Privatizations may bring investment Continuing tender procedures for state

  • pportunities and relief in bureaucracy in owned companies

tender procedures Less corruption = less unfair competition Less corruption = less unfair competition

slide-35
SLIDE 35

PRESUMABLE IN ALL SCENARIOS 1: NON-TARIFF BARRIERS REMAIN

slide-36
SLIDE 36

PRESUMABLE IN ALL SCENARIOS 1: NON-TARIFF BARRIERS REMAIN

  • Licenses (ex. Radar-Siscomex)
  • Inspections (ex. Anvisa – Mapa)
  • Technical specification and approbation (Inmetro)
  • (in-) operational custom services
  • And so on
slide-37
SLIDE 37

DEALING WITH NON-TARIFF BARRIERS

  • Import via large existing importer

(end user or importer – distributor)

  • Have exclusive product or service with high enough added value
slide-38
SLIDE 38

DEALING WITH NON-TARIFF BARRIERS

  • Import via large existing importer

(end user or importer – distributor)

  • Have exclusive product or service with high enough added value
  • Eventually consider setting up a joint-venture with an existing partner
slide-39
SLIDE 39

DEALING WITH NON-TARIFF BARRIERS

  • Import via large existing importer

(end user or importer – distributor)

  • Have exclusive product or service with high enough added value
  • Eventually consider setting up a joint-venture with an existing partner
  • Feel relatively protected if you do!
slide-40
SLIDE 40

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

A) Triggered by public acclaim B) Reinforced by independence of Federal Police C) Made possible by several instruments

slide-41
SLIDE 41

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
slide-42
SLIDE 42

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
slide-43
SLIDE 43

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
slide-44
SLIDE 44

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
slide-45
SLIDE 45

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
slide-46
SLIDE 46

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
  • Currency Exchange Controls
slide-47
SLIDE 47

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
  • Currency Exchange Controls
  • Identification of “Ultimate Beneficiary Shareholders”
slide-48
SLIDE 48

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
  • Currency Exchange Controls
  • Identification of “Ultimate Beneficiary Shareholders”
  • Obligation for foreign shareholders to appoint a local Attorney
slide-49
SLIDE 49

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
  • Currency Exchange Controls
  • Identification of “Ultimate Beneficiary Shareholders”
  • Obligation for foreign shareholders to appoint a local Attorney
  • Nominal responsibilities and liabilities of shareholders and management
slide-50
SLIDE 50

PRESUMABLE IN ALL SCENARIOS 2: CORRUPTION FIGHTING AND TIGHTER COMPLIANCE RULES

Made possible by several instruments:

  • SPED
  • Taxes levied at the source
  • International agreements
  • Inverted proof principle
  • New anti-corruption law 12.846/2013
  • Currency Exchange Controls
  • Identification of “Ultimate Beneficiary Shareholders”
  • Obligation for foreign shareholders to appoint a local Attorney
  • Nominal responsibilities and liabilities of shareholders and management
  • “Bacenjud” system
slide-51
SLIDE 51

THE NETHERLANDS WITHIN THE EUROPEAN UNION:

  • Tax regime for holding structures under questioning
  • Remaining advantages as port of entry:

i) Geographical position ii) Hinterland connections iii) Multilingual population iv) Logistic and Financial Service Supply v) Custom Clearing systems

  • On bilateral treaties, decision making shifted from The Hague to Brussels
slide-52
SLIDE 52

BRAZIL WITHIN MERCOSUR:

  • Mercosur trade block as such overrated by many EU entrepreneurs
  • Social, economical and political developments often compared too quickly
  • Access to markets as Colombia and Chile felt as easier
  • Attempts to export and assembly in one country for another leading to

disappointments

  • Florida continues being alternative for central representative offices
  • Ongoing recommendation by Dutcham is individual attention to Mercosur

member states

slide-53
SLIDE 53

For more information about and / or assistance regarding trade and investments between Brazil and The Netherlands, be welcome to contact me via

hans@dutcham.com.br

THANK YOU VERY MUCH!