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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Reality Brazil has a combined geographic size, population and economy shared by only the USA and other BRICs Source: Invest Brasil Australia Unlimited
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 Australia Unlimited
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 • Australia Unlimited
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 $350 million investment in crop protection products – Wellard and Sanger have both invested in Brazil to produce meat for global markets – QBE provides micro insurance – Populous involved in the master plan design of Natal Soccer Stadium for 2014WC – MI Associates has contracts with Rio 2016 Organizing Committee for Organizational Consultancy, Games Foundation Plan and National Olympic Training Centre Australia Unlimited
Political Update New Dilma administration is generally agreed to • have made a promising start, with a business focus and reining in of spending (restricted minimum wage rise) Foreign policy move towards closer relations with • USA Recognized importance of delivery of successful • World Cup & Olympics Efficient administrator, not charismatic leader • Challenges: • can she manage her coalition? – can she effect political and taxation reforms – can she make public services more efficient, cost- – effective and responsive to the needs of the population? can she manage an overheated economy? – Overriding message - continuity • Australia Unlimited
Infrastructure
Brazil’s Infrastructure Challenges Road, Rail and Metro transportation • Airports • Ports • Sewage systems • Water management • Solid waste management • Power • Information and Communication Systems • Australia Unlimited
Plan of Accelerated Growth 1 (PAC1) Recognition that infrastructure in Brazil is inadequate and that needs • extend beyond what is required for the World Cup & Olympics A federal government program with planned investment of around R$ • 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 • Australia Unlimited
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 Australia Unlimited
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Rio-São Paulo High Speed Train Australia Unlimited
Olympics & World Cup
Australian Sports Events Expertise 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. “Watercube”, Beijing Olympics Khalifa Stadium, Doha Etihad Stadium, Melbourne Australia Unlimited
Upcoming Sports Events in Brazil 2011 2013 2014 2015 2016 Military Games World Cup Confederations Cup Copa America Olympic Games Australia Unlimited
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$59 billion are planned in order to • develop the necessary infrastructure (stadiums construction, transport system, roads & highways, airports, electric power network expansion, telecommunication networks, water & waste) in addition to contracts for the staging of the event. Biggest challenge: Airports • Australia Unlimited
Host Cities – Infrastructure Investment US$ 1.7 bi US$ 3.2 bi US$ 2.9 bi US$ 2.4 bi US$ 0.9 bi US$ 4.7 bi US$ 2.6 bi US$ 5.6 bi US$ 19.3 bi US$ 8.8 bi US$ 3.4 bi US$ 3.9 bi Australia Unlimited
Investments by type Sector US$ Million Responsibility States & Urban Mobility 35,042 Municipalities Airports 3,938 Federal Federal & Private Ports 425 Sector Electric Energy 1,530 Federal Basic Sanitation 7,139 Federal Hotels 7,256 Private Sector Hospital 674 Federal Security 720 Federal States & Stadium/Arenas 3,111 Municipalities / Private Sector Total 59,839 Source: ABDIB – Brazilian Association of Infrastructure and Basic Industries Australia Unlimited
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. Australia Unlimited
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 Australia Unlimited
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. Australia Unlimited
Rio 2016 Olympic Games 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 • Australia Unlimited
Rio 2016 – Olympic Clusters & Sports Venues Deodoro Temporary 20% Existing Maracanã 54% Additional (New) 26% Copacabana Barra Australia Unlimited
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