Brazil has infrastructure prepared to meet the demands of globalized markets. Given its fundamental importance to sustainable economic development, the Brazilian government has a specific agenda for investments in the field, focused on public-private partnerships with support from federal funds.
The Accelerated Growth Plan (known as the PAC), was launched by the federal government in 2007, and has provided a strong boost to the development of infrastructure in the country. In its first four years, PAC helped to double Brazilian government investment from 1.62% of GNP in 2006 to 3.27% in 2010, in social and urban, logistical and energy infrastructure. In 2011, the program entered its second phase, PAC 2, with investments of R$ 955 billion forecast from 2011 to 2014.
There are large cities in Brazil, such as São Paulo, Rio de Janeiro and Brasília, which have complete urban infrastructure, and offer properties with prices that are much lower than those in Mumbai or Moscow, for example. Other smaller cities, although equally well structured, such as Porto Alegre, Belo Horizonte and Recife, have technology parks close by and rents that are even less expensive, with average prices about 50% lower.
These locations are, therefore, an excellent option for companies that intend to invest in the country, but want to escape from the large centers. Although they are geographically outside Brazil’s IT-BPO axis, these and other cities are prepared and offer quality and scale similar to the largest metropolitan regions, in addition to qualified professionals and good communication infrastructure.
The Brazilian communications sector grew at an accelerated pace and in a well-structured manner. The use of computers, for example, is widely distributed. According to IDC, the sale of 15.4 million PCs from 2010 to 2011 made Brazil the world’s third largest market for sales of these products, exceeded by only the United States and China. The Growth was 16.67% in 2010 and 10% in 2011, and the forecast for 2012 is 14% sales growth reaching 17.6 million PCs. The installed base of computers in Brazil was 91.6 million in 2011, according to the Fundação Getulio Vargas – this is approximately one computer for every two Brazilians.
In terms of Internet access, Brazil presents impressive statistics. There were 77.5 million fixed and mobile broadband accesses in the first semester of 2012, according to the Brazilian Telecommunications Association (Telebrasil). Fixed access grew 11.3% in comparison with June 2011, reaching 18.7 million. Meanwhile, mobile broadband access more than doubled, with growth of 30.9 million, reaching 58.8 million connections.
According to the National Telecommunications Agency – Anatel, telephone services also continued to expand considerably. By mid-2012, there were 43.2 million fixed telephone lines. With 256 million mobile connections according to Anatel, Brazil has gone beyond the mark of one cell phone per resident – with 130.44 accesses per 100 inhabitants.
With continental size, Brazil has developed a system that integrates various forms of transportation quickly and efficiently. The highway network, which is responsible for most of the transportation in the country, has 1.7 million kilometers that cross the entire country. The river network, which is essential for exporting agricultural products, has 44 thousand kilometers, and the railway network, which is also used for cargo, is more than 30 thousand kilometers long.
The infrastructure of the Brazilian air transport system stands out globally. There are 66 airports in Brazil that handle 97% of the country’s regular air traffic. Each year, there are 2.88 million takeoffs and landings, transporting 178.8 million passengers according to the Brazilian Company of Airport Infrastructure - Infraero.
Brazil's energy system is safe and diversified. The network is formed by hydroelectric dams, thermoelectric power plants and solar, wind and nuclear generators. There is a strong presence of renewable energy sources in the Brazilian energy matrix, it is one of the cleanest in the world. While in Brazil renewable energy accounts for more than 45% of total generation, globally this percentage is no more than 13%.
The country is self-sufficient in oil, producing more than it consumes, and its production model for ethanol made from sugar cane was indicated by the United Nations as model because of its low cost and sustainable production. Brazil is the world’s second largest producer of ethanol, behind only the United States.
The Information Technology sector (IT) has strategic importance for Brazil, and the strengthening and growth of the field is a priority of federal industrial and technology policy. The government offers various incentives and financial and institutional support programs for the IT field designed to make Brazilian companies even more competitive. The government also provides capital to small and medium companies by means of investment funds and risk capital, in addition to providing incentives to formation of consortiums and joint ventures.
Strategic to the Brazilian government, the IT sector has benefits from direct payroll income tax incentives, and also for labor training programs:
• Payroll tax exemptions: change in the base of calculation of social security contributions from 20% of payroll to 2% of sales. Exports are exempt up to 20%, given that they are excluded from the base for calculation.
• Law Nº 11.908: permits a company to income tax deductions of up to 200% for spending on labor training and R&D.
• Law of the Good: allows income tax deductions for technology transfers, licenses and royalties.
• Tax incentives for special projects, such as reductions in property (IPTU) and social security taxes (ISS).
• North and Northeastern region: subsidies of 40% - 60% on salaries of professionals who work in research.
• Financing for training programs, increasing innovation and certifications.
The amounts spent by companies for labor training and education can be deducted by up to 200% in the calculation of Income Tax (IR). When applied to Research and Development, the investment in training and education can be deducted from income tax for companies from 160% to 200%.
For the purchase of equipment used in R&D, there is a 50% reduction in the tax on industrial products (IPI), in addition to exemption from this tax for imports of materials used to develop software. There are also tax reductions on amounts paid for technology transfer, licenses and royalties.
In addition to tax discounts, IT companies operating in Brazil can chose between various lines of public credit for loans at reduced interest rates. The Banco do Brasil and the Caixa Econômica – the largest public banks in the country - offer advantageous conditions, as does the National Economic and Social Development Bank (BNDES). There is also a credit line especially developed for technology projects, offered by the Research and Project Finance Agency (Finep) – which is affiliated to the Ministry of Science, Technology and Innovation (MCTI) - which finances scientific innovation and technology research.