Country Update – Business in Brazil
The last decade or so has certainly been a tumultuous time for Brazil. A number of both internal and external factors have produced economic, political and social upheaval. After a marked turnaround in 2017 that saw an impressive decline in inflation and interest rates and a subsequent boost in confidence in consumers and the general business community, 2018 has seen domestic and external challenges put somewhat of a dampener on the positive news that has emerged from the country. Regardless of this, and in fact in many ways because of this, Brazil holds a unique and untapped market potential.
October 2018 Elections
Brazil is now in full swing for its upcoming elections in October. A lack of political clarity has hindered foreign investment in 2018, with widely publicised industrial action in May in the form of a truckers’ strike further spooking investors as the country’s populist streak was put on full display.
The upcoming elections remain a source of anxiety for potential investors, with the outcome itself and potential impact on the economy still remaining unclear even as we draw closer to October. However, there are positives to the situation. Brazilian society at large seems to be aware of the need to continue to work to resolve the country’s underlying economic issues. In particular, the ideas of stamping out corruption and making it easier to do business in Brazil have gained traction as wider cultural shifts, rather than being viewed as statements belonging to individual political parties, a change which bodes very well for foreign investors. Economic responsibility has seemingly become a core theme for a number of the competitive candidates.
However, with voting and campaigning to soon be out of the way, it is important to keep in mind that historically Brazil has always rebounded strongly post-election. A turnaround can be expected in 2019 regardless of who assumes the presidency. The largest economy in Latin America looks to be once again taking on a prime position as one of the most competitive markets in regards to economic and business expansion opportunities, with the economy enjoying historically low-interest rates and inflation tame once again as the fallout from the truckers’ strike seemingly forgotten. Brazil’s maturing economy is seeing a gradual recovery following the economic disasters of the last few years, positioning it as a key destination for business expansion and opportunity. In turn, this type of foreign investment will ensure that Brazil will enjoy long-term growth.
Brazil should remain as an attractive destination for international investors for a number of reasons. It has the largest domestic market of anywhere in Latin America, with a massive population of 210 million. There is easy access to raw materials in the resource-rich nation. Brazil enjoys a highly diversified economy that is far less vulnerable to the current international climate than some of its competitors (for example, Mexico is heavily reliant on the fortunes of the United States). Finally, it offers a highly strategic geographic position that allows for easy access into the rest of South America.
Entering the market
Given the combination of the country’s long-term prospects and the fact that many investors have been hesitant to make a move prior to the elections, in many ways, it is a uniquely fortuitous time to be considering a possible expansion into the biggest market in Latin America, with prices low but opportunities abound. With Brazil’s long-term outlook looking favorable, now can certainly be seen as the time to make the plunge while there are still fewer investors relative to the size of the market.
Despite the positive news, doing business in Brazil can still be difficult initially, particularly for companies not familiar with the region. An intimate knowledge of the country’s system and particular bureaucracies is definitely a must. Similar to neighboring Argentina, complex business regulations and tax laws remain a key consideration to be taken into account. For example, the company set-up process in Brazil takes longer than elsewhere in Latin America and there are a number of steps that have to be fulfilled along the way.
We feel that for a new company to be successful in Brazil, it is critical that they have the right guidance and support from someone who has done it all before and is familiar with the particular “ins and outs” of the country. Harris Gomez Group’s experienced team can assist in each aspect of a company’s expansion in the region to ensure that the unique and still largely untapped potential of Brazil can become available to your company.
Harris Gomez Group is an international law firm with offices in Santiago, Bogotá, and Sydney. Our firm has been working with mining equipment, service, and technology providers both in Australia and internationally for 16 years. We find that our clients appreciate that we understand the industry, provide fixed pricing, and take the time to learn our clients business.
To better understand how we can support you, please contact Cody Mcfarlane at firstname.lastname@example.org