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Brazil Market Update and Opportunities in Infrastructure , 2014 FIFA World Cup, & 2016 Rio Olympic Games
Greg Wallis
Consul-General & Trade Commissioner
Australian Trade Commission
São Paulo, Brazil
28 March 2011
Brazil Overview & Update
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Images
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Source: Invest Brasil
Brazil has a combined geographic size, population and economy shared by only the USA and other BRICs
Reality
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Why Brazil?
• 29 million new consumers in past 8 years; 2/3 Brazilians now middle/upper classes
• World’s 7th biggest economy (recently overtaken Italy; soon to overtake UK and France)
• Stable and growing: 7.5% growth in 2011; 4.6% predicted for 2011
• No. 1 global exporter and/or producer of sugar, coffee, orange juice, ethanol, iron ore,
soya beans, chicken, beef
• World’s largest unused arable land
• Rated 3rd most attractive investment destination by UNCTAD
• 2 major factors that define Brazil today vs. yesterday:
• Consistent long-term decline in interest rates, which has stabilized businesses and
established a long-term business culture
• Consistent decline in income inequality
• Consumers have an increasing capacity to purchase imported goods coupled with an (until
recently) unprecedented access to credit. Auto financing, home mortgages, credit and
debit cards are penetrating previously "unbanked" sectors of society
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Main Growth Drivers
• Changing demographic – rising middle class • Global demand for commodities, especially China • Growth Acceleration Programme (PAC) – launched in 2007 (R$ 500billion). PAC
2 calls for an even larger combined public and private investment of almost R$1.6 trillion to 2020. Massive investments in energy, transportation
• FIFA World Cup 2014 and 2016 Olympic Games
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Current Australian Exports/Investments in Brazil
• Currently some 430 Australian merchandisers export to Brazil
• 55 Australian companies established in Brazil
– Pacific Hydro’s $160 million wind power investments in NE Brazil
– BHP Billiton, Mirabela, Troy Resources, and 11 other juniors have investments in gold, iron ore, bauxite, oil and gas
– Nufarm has a $350 million investment in crop protection products
– Wellard and Sanger have both invested in Brazil to produce meat for global markets
– QBE provides micro insurance
– Populous involved in the master plan design of Natal Soccer Stadium for 2014WC
– MI Associates has contracts with Rio 2016 Organizing Committee for Organizational Consultancy, Games Foundation Plan and National Olympic Training Centre
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Political Update
• New Dilma administration is generally agreed to have made a promising start, with a business focus and reining in of spending (restricted minimum wage rise)
• Foreign policy move towards closer relations with USA
• Recognized importance of delivery of successful World Cup & Olympics
• Efficient administrator, not charismatic leader
• Challenges:
– can she manage her coalition?
– can she effect political and taxation reforms
– can she make public services more efficient, cost-effective and responsive to the needs of the population?
– can she manage an overheated economy?
• Overriding message - continuity
Infrastructure
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Brazil’s Infrastructure Challenges
• Road, Rail and Metro transportation
• Airports
• Ports
• Sewage systems
• Water management
• Solid waste management
• Power
• Information and Communication Systems
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Plan of Accelerated Growth 1 (PAC1)
• Recognition that infrastructure in Brazil is inadequate and that needs
extend beyond what is required for the World Cup & Olympics
• A federal government program with planned investment of around R$
500 billion between 2007 and 2010.
• The priorities were sanitation, housing, transportation, energy, power
and water resources, among others.
• The final assessment of the PAC1’s performance, made by the federal
government, indicates that 88% was carried out at a cost of R$ 444
billion.
• R$115 billion was spent in the Oil & Gas sector
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PAC2
• Introduced in 2010, investments of $R959 billion between 2011 and 2014 and
$R1.59 trillion in total
• Sectors
Improving our Cities R$57.1 billion
Citizen Community R$23 billion
My Home, My Life R$278.2 billion
Water and Electricity for All R$30.6 billion
Transportation R$104.5 billion
Power R$465.5 billion
TOTAL R$958.9 billion
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Rio-São Paulo High Speed Train
Olympics & World Cup
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The 21014 FIFA World Cup and 2016 Rio Olympics is an opportunity for Australia and Brazil to build relationships at a number of levels because of the perceived expertise of Australia in both the preparation and management of the games, and as an Olympic sporting power.
Australian Sports Events Expertise
Khalifa Stadium, Doha “Watercube”, Beijing Olympics Etihad Stadium, Melbourne
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Upcoming Sports Events in Brazil
2011 2013 2014 2015 2016
Military Games Confederations Cup World Cup Copa America Olympic Games
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2014 FIFA World Cup Brazil
• The 2014 World Cup will be conducted in 12 Brazilian cities in the five geographic regions.
• Public works projects of some US$59 billion are planned in order to develop the necessary infrastructure (stadiums construction, transport system, roads & highways, airports, electric power network expansion, telecommunication networks, water & waste) in addition to contracts for the staging of the event.
• Biggest challenge: Airports
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Host Cities – Infrastructure Investment
US$ 1.7 bi
US$ 3.2 bi
US$ 2.9 bi
US$ 2.4 bi
US$ 4.7 bi
US$ 5.6 bi
US$ 8.8 bi
US$ 3.9 bi
US$ 3.4 bi
US$ 0.9 bi
US$ 2.6 bi
US$ 19.3 bi
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Investments by type
Sector US$ Million Responsibility
Urban Mobility 35,042 States &
Municipalities
Airports 3,938 Federal
Ports 425 Federal & Private
Sector
Electric Energy 1,530 Federal
Basic Sanitation 7,139 Federal
Hotels 7,256 Private Sector
Hospital 674 Federal
Security 720 Federal
Stadium/Arenas 3,111
States &
Municipalities /
Private Sector
Total 59,839 Source: ABDIB – Brazilian Association of Infrastructure and Basic Industries
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Sustainability in the World Cup 2014
FIFA and the Local Organising Committee (COL) of the Brazilian Football Confederation (CBF) have decided that the World Cup 2014 should be the “Green Cup”
Consequently, all stadium projects (new and remodelled) are being designed in accordance to sustainability guidelines, including:
• Recycling and use of demolition materials;
• Permeable flooring and roofing throughout the complex;
• Green roofing;
• Use of solar panels for harnessing energy;
• Use of efficient lamps and energy-efficient equipment;
• Rainwater collection; storage and re-use;
• Material specifications taking into account sustainability criteria;
• Waste management during construction and throughout the arena’s life cycle.
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2014 World Cup Stadiums Overview
Investments needed in all of the 12 selected cities. The bids related to the public arenas are structured in two different models:
• 5 Public-Private Partnerships (PPP)
- Mineirão Complex – Minas Gerais
- Fonte Nova – Bahia
- Castelão Stadium – Ceará
- Arena Recife – Recife
- Dunas Arena – Rio Grande do Norte
• 4 Public Arenas to be operated by public authorities
- Amazonas Arena – Amazonas
- Pantanal Arena – Mato Grosso
- Maracanã – Rio de Janeiro
- Mané Garrincha – Brasília
• 3 Private Arenas
- Corinthians Arena – São Paulo
- Beira Rio – Rio Grande do Sul
- Baixada Arena – Paraná
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Decision Making
2014 FIFA World Cup Organising Committee
• The overarching structure that is liaising with the 12 host city organizing committees.
• It reports to FIFA headquarters and it is responsible for delivering the World Cup.
Host City Work Groups (Local Organizing Committees)
• State and Municipality authorities that will be responsible for procurement and to deliver the event in each city.
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• First South American host in the history of the Games has generated great popular support and enthusiasm
• Three levels of Government working together
• Games staged in four clusters around the city (Barra, Deodoro, Maracana and Copacabana). 11 permanent and 4 temporary sport installations will be constructed plus modernization of existing ones
• A BRT (Bus Rapid Transport) system will be implemented in the city to connect the planned clusters as well as modernization and extension of metro lines
• Main driver/concern: Urban Legacy
Rio 2016 Olympic Games
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Rio 2016 – Olympic Clusters & Sports Venues
Existing 54%
Temporary 20%
Additional (New) 26%
Barra
Deodoro
Copacabana
Maracanã
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Investments by type
Source: ABDIB – Brazilian Association of Infrastructure and Basic Industries
Sector US$ Million
Airport & Port 1,001
Highways & Railways 4,451
Accommodations 56
Sports Facilities (Competition & Training) 490
Olympic Village 427
Barra Media Village 812
Electricity Infrastructure 770
Environmental Management Systems 1,205
Health 10
Security 813
IBC/MPC 203
Urban Legacy 820
Total 11,059
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Olympic Games Organizational Structure
Rio 2016 - Local Organising Committee
• Equivalent to 2000 SOCOG; responsible for games organization and operations
Olympic Public Authority (APO)
• Equivalent and inspired in the London ODA – just created and to be headed by Henrique Meirelles (ex President of Central Bank). Peak organization for delivery of the Olympic Games
Brazil 2016
• Procurement body and operational arm of the APO, for contract co-ordination & procurement
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• APO interacts with all government institutions (3 levels: Federal, State and City)
• Procurement of non-Olympics specific infrastructure also done at 3 levels of government
IOC / IPC
Rio 2016 APO
GOV
Brazil 2016
Games Organizational Structure
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Opportunities for both events • Master planning and project management
• Urban infrastructure improvements - legacy planning
• Design, development and construction of venues and related games infrastructure
• Overlay – temporary venues, modifications to existing venues and temporary requirements for operations
• Games services, accessibility, catering, cleaning and waste
• Games management, planning and coordination, training staff and volunteers
• ICT – technology operations and telecommunication
• Transport (air, road, rail, metro), accommodation and service infrastructure
• Major event security and risk management
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Opportunities for both events
• Arena Management
• Branding, communication & marketing
• Environmental consultancy
• Security consulting (crowd control and risk management)
• Delegations’ accommodation planning
• Opening and Closing Ceremonies
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Other Infrastructure Projects
• In addition to funding allocated under the PACs and projects planned for the World Cup & the Olympics, states in Brazil have their own infrastructure investment programs
• In Sao Paulo alone, there are currently R$22bn worth of PPP infrastructure projects underway or planned in the next few years
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• Brazil is undergoing an unprecedented period of investment in infrastructure
• Much of this is related to the World Cup and Olympics, but there is also the PAC2 and states’ programs
• Project opportunities range from PPP engagement level down to the “nuts and bolts” of specific technologies for a wide range of sectors including construction and transportation
• Key contacts may be engineering companies, Rio 2016, Brazil 2016 or host city authorities – we can help identify
• Most World Cup stadium design and refurbishment contracts already let but many opportunities remain
Key Messages
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• Oversized and convoluted tax system
• Distorted labour market
• Poor educational system
• Slow judicial system and bureaucracy
• Weak infrastructure
• Low “Ease of Doing Business” ranking
…but the market is huge, growing, and becoming more accessible every year, and foreign companies are welcome and successful
Brazil Challenges Still Remain
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Planned Activities: 2011/2012
Austrade and ally government and industry bodies are planning several activities (including trade missions; networking events; seminars) to engage Australian companies and Brazilian public and private entities: • SportAccord International Convention (London 3-8 April 2011) • Rio’s Mayor Visit to Australia (TBD)
• Business Club Australia (London 2012 Olympic Games)
• Visit of Minas Gerais State Government 2011
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For latest news and updates on the procurement processes please access: www.brazil2014-rio2016.com
To register your interest please access: www.brazilgames.icn.org.au
Register your interest!
Austrade is working closely with allies (including ICN, AISES, ALABC and ABCC) in developing contacts with a wide range of Brazilian companies and organisations with a connection to the World Cup and the Olympics. We are keen to promote specific Australian capability, and would be interested to receive profiles from relevant Australian suppliers since our aim is to present portfolios of specialist capability to clusters of related contacts.
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Austrade – Contact Details in Brazil
Greg Wallis Fabio Nave Consul General & Trade Commissioner Business Development Manager Tel: +55 11 2112 6222 Tel: +55 11 2112 6212 E-mail: [email protected] E-mail: [email protected] www.austrade.gov.au/2014-Brazil-FIFA-World-Cup-and-2016-Rio-Olympic-Games/default.aspx
For more information please access:
Thank you!
Greg Wallis
Consul-General & Trade Commissioner
Australian Trade Commission
São Paulo, Brazil