Brazil: Business environment at a glance

Brazil: Business environment at a glance. Check it out:
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2006-07: Heavy burden of red tape impairs efficiency, despite progress on boosting competition and private investment in infrastructure. Intellectual property rights increasingly respected, but weak enforcement leaves piracy rife in some areas.



2008-10: Improvements to regulatory agencies and spread of public-private partnerships will stimulate private investment.

Policy towards foreign investment

2006-07: Foreign direct investment (FDI) is officially welcomed, but in some areas domestic businesses will receive preferential treatment. FDI inflows will hold up, but will be below the privatisation-driven levels seen in the late 1990s.

2008-10: Tax incentives for foreign and domestic investors will favour those considering Brazil as an export base.

Foreign trade and exchange controls

2006-07: Diversified export markets foster continued growth of exports. Slow progress in trade talks with OECD countries, as Brazil will insist on reciprocal liberalisation. Further easing of remaining restrictions on currency movements.

2008-10: Export development will continue to be a policy priority, but remaining trade barriers will ease only slowly.

Taxes

2006-07: No discrimination against foreign capital, but the tax system remains complex and unwieldy.

2008-10: Efforts to reduce tax distortions, but the tax burden will still be by far the highest in the region.

Financing

2006-07: Capital markets continue to deepen, as macroeconomic stability is consolidated and crowding out by the public sector diminishes, but access to medium-term external financing will remain relatively costly and limited.

2008-10: Fiercer competition between financial institutions will support gradual reduction in borrowing costs, although these will remain high. Increased availability of equity and domestic bond market finance.

The labour market

2006-07: Labour market rigidities persist, but unemployment contains unit labour costs. Strikes and labour unrest are rare.

2008-10: Skills shortages persist, but education and training will gradually improve. Major labour reform unlikely.

Infrastructure

2006-07: Gradual advances on alleviating difficult and costly logistics, reflecting underinvestment in physical infrastructure.

2008-10: Public-private partnerships will stimulate needed investment in transport infrastructure and the energy network.

Copyright 2006 Economist Intelligence Unit
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