Brazil

Brazil, officially Federative Republic of Brazil, country of South America that occupies half the continent’s landmass. It is the fifth largest country in the world, exceeded in size only by Russia, Canada, China, and the United States, though its area is greater than that of the 48 conterminous U.S. states. Brazil faces the Atlantic Ocean along 4,600 miles (7,400 km) of coastline and shares more than 9,750 miles (15,700 km) of inland borders with every South American country except Chile and Ecuador — specifically, Uruguay to the south; Argentina, Paraguay, and Bolivia to the southwest; Peru to the west; Colombia to the northwest; and Venezuela, Guyana, Suriname, and French Guiana to the north. Brazil contains most of the Amazon River basin, which has the world’s largest river system and the world’s most-extensive virgin rainforest. The country contains no desert, high-mountain, or arctic environments.

Most of the inhabitants of Brazil are concentrated along the eastern seaboard, although its capital, Brasília, is located far inland and increasing numbers of migrants are moving.

Economic Overview

Brazilian economy was born with an export vocation. For centuries, first as a Portuguese colony, and later in the first decades as an independent country, Brazil was inserted in international trade as a supplier of highly demanded commodities such as timber, sugar, gold, rubber and finally coffee. Though the Brazilian economy late diversified and grew both in size and complexity, it never lost its trader nature.

From a purely agricultural background, Brazil during the 20th century developed a solid and complex industrial park, producing both consumer and capital goods. During the “Brazilian Miracle” years of the 1970s, Brazil posted some of the highest growth figures in the world, paving the way for its inclusion among the developed nations. Unfortunately, as happened to many developing countries by the late 70s and during the 80s, the debt crisis hit the country, leading to a period of slow growth and high inflation. It was only in the 1990s, with the introduction of a new currency (Real) and the implementation of a highly successful economic plan (the ”Real Plan”) that Brazil managed to tame inflation and erect the structures for a new flight during the 2000s, when Brazil became for a moment the world’s sixth biggest economy.

All along this way, Brazil tackled the double challenge of reducing poverty and preserving its rich environmental resources. Through economic growth and specifically crafted policies, Brazil was successful in reducing famine and extreme poverty, as well as in raising school attendance and access to higher education. As for the environment, Brazil takes pride in its clean energy matrix, 83% of which comes from renewable resources (1st in Latin America, 3rd in the world), mostly hydropower. Brazil also became a leading voice in international bodies, hosting two important conferences on the subject (Rio-92 and Rio+20, in 2012).

Brazil is known for being the breadbasket world: it is the world’s main exporter of coffee, soybeans, beef, poultry and sugar, and the second greatest exporter of grains, holding 19% of the market. In other words, Brazil feeds the world, and provided an invaluable contribution when production and distribution were disrupted during the peak of the COVID pandemic. This success is in great part due to the efforts of Brazilian public company Embrapa, which managed to develop high technology for production of new and more resistant crops that thrive in previously hostile areas, ushering a green revolution in Brazil. This technology is willingly shared with developing countries that have a technical cooperation agreement with Brazil, contributing to the development of agriculture and reduction of famine.

As the example of Embrapa makes clear, Brazil is much more that a commodities country. Brazilian company Embraer is the world’s third biggest producer of commercial aircraft, having sold four Phenom-100 to the Pakistan Air Force in 2010. It’s defence wing produces from light patrol aircraft to big transport planes such as the C-390, for use by the Air Forces of many countries around the globe. Petrobras developed pioneering technologies for deep-sea oil extraction, allowing Brazil to export 1.3 million barrels daily in 2021 and rank 8th among the world’s largest oil producers. Brazilian companies developed the technology to mix 27.5% of biofuel in gasoline, which could be shared with other countries to reduce oil dependency. Brazil is also 13th in the ranking of scientific publications, has a flying car startup and even its gaming industry is thriving, having grown 169% in the last four years.

Regional relations

Brazil has been the biggest economy in South America since the 1970s and currently responds for around 50% of the continent’s GDP. It is also the largest and most populous country in the region. Relations with neighboring countries, though, have been friendly and peaceful for over one and a half century, ever since Brazil last fought a regional war (1865-70). All the borders were established through diplomatic means, and the focus of regional relations are the establishment of a fluid political dialogue and physical and commercial integration – the last best represented by the Commom Market of the South (MERCOSUR), currently at the customs union stage. This tradition of regional peace is an asset often overlooked, providing for stability and growing trade within the region, to which Brazil is a natural entry point.

COVID measures

Much as in the rest of the world, Brazil was hardly hit by the COVID pandemic, which inflicted huge personal, social and economic losses to the country. The Brazilian government extended emergency financial relief to poorer families, helping them to attend to their basic needs, and at the same time keeping economic activity afloat. As vaccination advanced, the economy gradually went back to operating in full force and, beating every projection, the country is expected to finish the year with higher GPD growth and lower inflation than estimated by bodies such as the IMF and the World bank. In every possible sense, Brazil is open for business.

Brazil-Pakistan economic relations

With similar populations, Brazil and Pakistan are regional giants that have very similar positions in most international themes and share the same challenges: the fight against poverty, economic inequalities and climate change. Both Pakistani and Brazilian peoples are warm, hospitable and friendly, but separated by a huge geographical distance and a lack of mutual knowledge.

Brazil was the first country in South American to recognize Pakistan, shortly after partition. It was also the first country from that region to install an embassy in the then capital Karachi, in 1952 – or 70 years ago. Next year, the two countries will celebrate 75 years of friendly and fruitful diplomatic relations.

Trade between Brazil and Pakistan has been on an ascendant trajectory since 2018, uninterrupted even in pandemic times. After first crossing the line of US$ 1 billion turnover in 2020, bilateral trade grew a further 24.9% to close 2021 at US$ 1.3 billion and is currently 11% above the same period of last year, according to Brazilian numbers. Pakistan is already one of the 40 most important destinations of Brazilian exports, and one of the 5 biggest buyers of Brazilian soybeans, of which Brazil is currently Pakistan’s most important supplier (in 2021, Brazil accounted for about two thirds of Pakistani soybean imports). Cotton is the second most important Brazilian export to Pakistan, for use in the latter’s robust textile industry, creating a value chain that connects the two countries – in 2020, Brazil was the third most important supplier of materials for use in Pakistan exports, according to ADB.

Even with these positive developments, some troubling aspects of Brazil-Pakistan bilateral cannot be overlooked: first, it is highly unbalanced towards Brazil (US$ 1.2 billion Brazilian exports against only US$ 95 million imports); second, it is highly concentrated in basically two products – the abovementioned soybeans and cotton, which account for over 80% of Brazilian exports to Pakistan; third, and most important, it is still much below potential, lagging behind the numbers of Brazilian trade with Iran, India and Bangladesh. Tackling these shortcomings is the challenge presented to the respective governments and business communities, aiming at overcoming distance to create opportunities that concur to the economic development of the two countries and the welfare of the two peoples.

Key to this end is people-to-people contact. This is why both countries should foster trade missions and constant contacts between the respective companies and chambers of commerce. Potential areas for Pakistani business people wanting to introduce their products in Brazil include textile garments, leather garments and gloves, home textile products, sports goods, surgical and manicure instruments.

Investment opportunities

Closer relations between the business communities of the two countries would not only open new opportunities for trade, but also for investments, which are almost non-existent form side to side. A potential seems to exist for the establishment of partnerships and joint ventures in areas such as meat processing, textiles, medical drugs, autoparts, chemical products and ethanol production.

The Brazilian government, at the federal, regional and provincial levels, offers several tax-related incentives to companies interested in investing in the country. For example, tax incentives and lower tax rates for manufacturers producing consumer goods such as mobile phones, tablets and related items. Often the incentives are directed to sectors the government has a particular interest in developing, such as infra-structure, IT, oil and gas, electronics, shipbuilding and export sectors.

Foreign and domestically-owned companies enjoy the same benefits in terms of incentives provided by government authorities. Most of the incentives are granted upon presentation by the investor of a project and its counterparts, such as a minimum amount invested and job creation.

The Brazilian government is also focused in fostering a competitive environment for R&D and innovation in Brazil. This concern is reflected in the creation of certain fiscal incentive mechanisms to promote investments in R&D by domestic and foreign companies established in Brazil.

Agriculture: Brazil has become one of the world's largest agricultural producers and exporters over the last two decades. Brazilian agricultural production has been steadily rising due to the intensive use of technology in machinery, equipment, and genetic improvement. Brazil combines 12% of the world’s water supply and one of the largest arable land areas in the world. The Brazilian government, through the Ministry of Agriculture, Livestock and Supply, has several incentive programs for agriculture and livestock, from credit lines to the enhancement of best practices and procedures.

Infrastructure: Brazil relies heavily on logistics and transportation networks to guarantee its competitiveness and to keep growing. Other infrastructure assets, such as power generation, mining and sanitation, are also key issues for Brazil’s development. The infrastructure sector has a central role both in the development of the Brazilian economy and increasing its competitiveness. Therefore, the government has been reshaping its efforts to boost this sector. The infrastructure projects portfolio has been increasingly diversified and there will be several investment opportunities in the coming years.

Renewable Energy: Brazil is the 9th largest power consumer and producer in the world, having a competitive and well-established regulatory and legal framework in the power sector. The opportunities go from the Regulated Market, with a successful auctions model, to the Free Market, an increasing and flexible corporate sourcing model, which currently corresponds to 30% of Brazil´s power demand. Brazil´s power market is massive: the country is the largest player in Latin America and stands among the top 10 in the world.

Private Equity and Venture Capital: Opportunities in Brazil have picked up since 2011. The segment dynamism is related to the growing amount of capital committed for investments in the country. The volume has significantly increased over a 10-year period, giving Brazil the leadership in the region.

In short, there are plenty of incentives and benefits available for foreign investors. For specific details about the incentives being offered by the Brazilian government, potential investors may contact the Commercial section of the Brazilian Embassy in Islamabad.

Political system

Brazil is a Presidential Republic, with a President that is both the Head of Government and the Head of State. The Legislative comprises two Houses – the Chamber of Representatives (513 members) and the Senate (81 members). The Judiciary has, at its top, the Supreme Court, with 11 Ministers. Brazil is a Federative Republic with 26 States and a Federal District that houses the capital, Brasilia.

Every 4 years the country holds general elections to select President, Governors of the 26 States and of the Federal District, all the members of the Chamber of Representatives and of the State Chambers and, alternately, 1 or 2 thirds of the members of the Senate. The next general elections are scheduled for this year, on October 2nd (first round) and October 30th (second round, if and where necessary). 156 million people are registered to vote. As the vote is mandatory in Brazil, elections in the country are among those with the highest number of participants in the world.

Tourism

Brazil is open for vaccinated travelers and has a lot to offer both for tourists and for people who visit the country with primarily business purposes: pristine beaches in the Northeastern region; historical colonial cities in Minas Gerais, Bahia and Pernambuco; natural wonders such as the Amazon forest, the Iguaçu Falls (both chosen among the seven new natural wonders of the world in 2007) and the wetland area of Pantanal; architectural marvels in the capital Brasilia and in São Paulo, the country’s largest and richest city; and, not last and definitely not least, the splendor of Rio de Janeiro, the “Wonderful City”. Brazil caters to all tastes and budgets and, with the legacy of infrastructure and expertise acquired from having recently organized the world’s two biggest sports events (World Cup 2014 and Summer Olympics 2016), is a country not to be missed – and which you will miss as soon as you leave it.

Health Sector

Brazil prouds itself for having the world’s largest government-funded public healthcare system: the SUS (“Sistema Único de Saúde” - Unified Health System), which is open for free to the whole population, including foreign residents. Thanks to the SUS, the whole Brazilian population has access to free universal health care, including exams, surgeries and vaccination.

The Brazilian system also stresses primary care, with specific programs focusing, among others, on family health, health at school and pregnancy and newborn care. The government also has a program to attract doctors to provide healthcare in poorer and remote locations.

Brazil has also top-notch private health care, with hospitals that are regional reference, well-equipped clinics and extremely qualified professionals.

Culture

Brazil has a rich and diverse culture, derived from its melting pot of peoples. From the original mix of native, African and Portuguese roots, Brazil later became a point of encounter for people from the most different parts of the world, each bringing hope and a particular background. The esteemed reader is probably not aware of the fact that Brazil nowadays hosts the biggest community of people of Japanese descent outside Japan, has more people of Lebanese descent that Lebanon itself, and the Italian community in São Paulo is said to be bigger than in Rome. The combination of these varied talents and experiences found expression in the country’s cultural affluence.

Brazilian music is well known for having given the world rythms such as “samba” and “bossa nova”, but these are just two expressions of a much wider universe of creativity and energy. Different regions have their own particular musical conceptions and cultural forms – a variety that even for Brazilians is difficult to capture. Though the world is well acquainted with Brazilian carnival, “carnaval” is actually celebrated in different ways across the country. Much could also be said about Brazilian literature, architecture, cinema and visual arts.

Another important feature of the Brazilian cultural heritage is, of course, football. As is widely known, Brazil is the most successful country in the history of World Cups, having won five times and aiming to regain its crown next December in Qatar.