Canadians eye opportunities in Brazil’s booming economy
Canadians eye opportunities in Brazil’s booming economy
By Marcelo Vital
Brazil and Canada have been good friends for a long time. But, lately, their partnership and interest in each other have been growing stronger. Trade investments have spiked both ways and new “open-skies” agreements are connecting more and more Brazilians and Canadians.
And the Consul General of Canada in Brazil, Abina Dann, thinks this is just the beginning. Ms. Dann has served abroad as a trade commissioner in São Paulo, The Hague and New York, opened Canada’s Trade Office in Mumbai, was a director at the Department of Foreign Affairs and International Trade, and was Canada’s Ambassador to Ukraine from 2005 to 2008. Consul General in Brazil since 2008, she has seen a steady growth in numbers and relationships.
“Canadian and Brazilian business people do not yet know each other as well as they could. We have similar origins, economic foundations, aspirations, and values. We are natural partners, not only to develop each other’s markets, but to work jointly in third countries”
DB – What’s the commercial relationship between Canada and Brazil today?
Abina Dann – Canada and Brazil have a healthy and growing commercial relationship. Yet, it is but a small part of what it could be. In 2010, our bilateral trade rebounded from a post-recession year in 2009, with a 40% increase in two-way trade. Canada exported CAD 2.6 billion to Brazil, and Brazil sent CAD 3.3 billion worth of goods in the other direction. That’s an all-time record. In five years, I hope that we will be able to double our bilateral trade once again. We will increase our joint participation in science, technology and innovation projects. We will increase the number of Brazilian students going to Canada, and encourage more Canadian students to come to Brazil. People to people experience – that is the key.
DB – How much is Canada-Brazil bilateral investment?
Abina Dann – At the end of 2010 – our latest figures – Brazilians had invested CAD 13.5 billion in Canada. That makes Canada the 6th largest destination for Brazilian Foreign Direct Investment. In the other direction, Canadians held CAD 9.7 billion of investments in Brazil. The dynamism and rapid growth of the Brazilian economy offers much potential for further Canadian investment. Canadian investors already have great interest in areas such as commercial real estate (both shopping malls and office space), agriculture, information and communication technology, and mining. Other growth areas for Canadian investors are the oil and gas sector, aerospace, health and life sciences, and clean technology or environmental industries.
DB – How do you explain the recent increase of Canadian and international interest in Brazil?
Abina Dann – Brazil has been a priority for the Government of Canada and a country in which we have a long history of engagement. I would say that the increase of interest internationally is just a reflection of the reality of what Brazil is today: it is now the sixth largest economy in the world, and is poised to continue climbing. It has joined the trillion-dollar club of the world’s largest economies and is a power to be reckoned with, both politically and economically. It is the largest democratic and economic power of all South America. Brazil has world-class commercial, political, academic, and technological capabilities.
DB – Prime Minister Harper recently visited Brazil and signed business and travel agreements with President Dilma. How do these agreements affect the overall relationship between the two countries?
Abina Dann – The Prime Minister and President Rousseff had a very productive encounter and signed various agreements and memorandums of understanding in the areas of business, agriculture, science and technology, just to name a few. We anticipate that these agreements are just the beginning of a very fruitful relationship between the two countries on all levels: government, business, science and technology collaboration, education and people-to-people connections. Both leaders launched a forum for the private sector to contribute to increasing trade and investment between the two countries; announced the creation of a Strategic Partnership Dialogue to foster discussions between Foreign Ministers on bilateral, regional, international and global issues; expressed support for the initiation of exploratory talks between MERCOSUL and Canada; agreed that fostering people-to-people links will enrich and strengthen Brazil-Canada relations; established an Energy Dialogue to enhance bilateral dialogue and collaboration on energy issues; agreed on the strategic importance of the newly established Canada-Brazil Joint Committee for Cooperation on Science, Technology and Innovation; and expressed support to initiate a Space Cooperation Dialogue to explore possible avenues for cooperation in the use of outer space for peaceful purposes.
Regarding the open skies-type Air Transportation Agreement between the two countries, we anticipate that this should have a very positive impact on the number of Brazilians visiting Canada and vice versa. Canada has seen an increase of 26% in trips (or 14,600 arrivals) by Brazilian travelers since the Canadian Tourism Commission first began marketing Canada as a tourism destination in Brazil in 2009. The new air agreement will increase even more the currently projected arrival of an additional 33,100 Brazilian travelers to Canada by the end of 2012.
DB – If a Canadian company wanted to go after the Brazilian market, what would be your advice?
Abina Dann – For all its dynamism and exciting potential, Brazil is a complex and challenging place to do business. Brazil is not a market for superficial short-term approaches. An investment of time, energy and money is required. One must be ready to build relationships for the long-term. One cannot be fooled by immediate opportunities, which are often temporary in nature. Be ready to invest in trips to the market, marketing tools in Portuguese, and to understand the legal framework of doing business in the country, as well as the country’s culture and people. Brazil may require work to understand and to succeed, but is well worth the effort.
PRIORITIES AND EMERGING OPPORTUNITIES IN BRAZIL
Brazil ranks as 11th largest among all destinations for Canadian investment. Ms. Dann believes that there is room for much more growth in terms of Canadian exports to Brazil. The best opportunities for Canadian companies lie in these 7 areas.
Canada is recognized in Brazil as a qualified and cost-effective supplier of aerospace equipment. Embraer imported US$2.6 billion of equipment in 2007, and its requirements are growing at a rate of some 25 percent annually, mostly for upcoming aircraft programs.
2. Clean Tech (Environmental Industries)
Given the projected growth of the Brazilian economy for the next 5 years, and the emphasis on infrastructure, the environmental industries market is expected to grow by 10% annually. Canada has identified Brazil as a priority market for the subsectors of air pollution control, solid waste management and water and wastewater. Also important are bio-energy, small hydropower, hydrogen & fuel cells, and wind energy.
3. Information and Communication Technology (ICT)
The Brazilian ICT sector is still dependent to a great extent on imported technology, giving good opportunities for Canadian companies with innovative technologies. Canada is considered a world-class leader, and the sector is growing as the number of world-class organizations fostering ICT innovation increases.
The Brazilian government’s economic expansion projects planned for the next six years are largely in infrastructure. Expected investments for the period 2010-2013 are in the region of US$160 billion, mostly in the areas of energy generation, telecommunications, water and waste water, roads, railways, and ports.
5. Life Sciences (Health Industries, Bio-Industries)
The life sciences sector in Brazil is massive. Among the 10 largest in the world, the Brazilian health care sector has maintained an average growth of slightly 4% a year since 2007. Canada’s strengths in the life sciences sector, particularly in bio-pharmaceuticals and in advanced medical technology fit well with the needs of Brazil.
6. Metals, Minerals & Related Equipment, Services & Technology
Brazil is the world’s largest iron-ore producer with substantial deposits of sixty other different minerals exploited by 1800 active mines. Canadian capability as a world-class supplier of mining equipment, services and exploration expertise is acknowledged by all local players. The 120 Canadian mining companies established in Brazil will invest over US$4 billion in the next three coming years as well.
7. Oil & Gas Equipment & Services
The 50 billion barrels of pre-salt oil reserves will require extensive infrastructure to be produced, processed and transported. Opportunities for Canadian companies are concentrated in pipeline construction, land exploration and production operations and offshore training services.