Effective Regulation Helps Brazil Continue to Attract Foreign Investment

[Image: Wellington Salgado – Flickr]

While there has been some speculation about whether or not Brazil will continue to yield profitable investments, the country has been making some strategic moves to insure that it will. Many economists have held confidence in Brazil’s economy due to their faith in the government’s regulation in the past. While housing prices have skyrocketed, Brazil has been able to maintain reasonable interest rates to avoid a housing bubble. Likewise, they are creating strategic tax incentives and deals to fight the slowing interest from foreign investors. Keep reading for some examples of effective action taken recently to ensure that Brazil will stay attractive to investors.

Jaguar Land Rover Plans Factory in Brazil

Britain’s Luxury car manufacturer, Jaguar Land Rover, announced plans to invest over $400 million USD or over $1 billion BRL in a new manufacturing plant in Brazil. The factory is expected to create 500-700 jobs. Competitors, including Daimler, BMW and Audi have all also recently announced plans for Brazilian factories. This is caused by a new tax hike on foreign car imports in Brazil as well as tax break for car companies who increase their domestic investments.

Odebrecht Wins Bid for Rio Airport

Brazil has sold the second largest airport in the nation to Odebrecht for approximately $8.3 billion USD or $19 billion BRL, over four times the starting bid. This was an important move for Brazil to prove that it can still attract investors after its growth began to slow. Following the announcement of this sale, Brazil’s currency, the real, surged. This deal is expected to help draw investors for further infrastructure investments.

Though economic growth has been slowing down recently, will strategic moves such as these by the Brazilian government be able to sustain growing prosperity in the long term? Or is the past decade of growth inevitably going to slow in the coming years?

Would you like to hear more about investment in Latin America? You should attend this year’s Private Equity World Latin America and Real Estate World Latin America conferences on May 6^th and 7^th.