Richard Meijer

What I am doing: Besides running a privately hold real estate business I am blogging om MasterclassBrazil.com. MasterClass Brazil was set up to provide a one-stop source of deep-knowledge for the growing foreign business community in Brazil. Why: Having been in Brazil for around 20 years, I have seen many big companies, expats and individuals failing miserably. I have burned myself once in Brazil, setting up ProgressOil, a company focused on the supply of Brazilian castor oil. I am now running a privately hold real estate business in Brazil. From all these experiences I have learned a lot. Despite the fact that I speak the language reasonable well, have a strong network and understand the do's and don'ts better, I am absolutely not saying I am an expert or specialist. Everyday I am learning new things and I believe Brazil is changing in such a rapid pace that the only way to survive in Brazil is to generously absorb and understand the information available to you. From my experience I have learned that there is a lot of information, facts and data about Brazil. I have set up MasterClassBrazil to structure this information so you can turn it in true knowledge, enabling you to be successful in your endeavors. There is nothing in the world so rewarding as sharing expertise and knowledge. Richard Meijer

Most commented posts

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Twitter Updates for 2012-01-04

Twitter Updates for 2011-11-11

  • http://t.co/8IhGxMAS #
  • Listening to LEd ZEppelin. Nu maar hopen dat Carolina dit ook gaat spelen met haar gitaar #

Twitter Updates for 2011-11-10

  • Wellicht interessant voor iemand in Sao Paulo.: Need professionals who speak Dutch, English and Flemish to work in…: http://t.co/FfCDt7F4 #

Twitter Updates for 2011-11-01

  • @JeanineHennis Wat is het standpunt VVD? Nederlanders overzee worden van hun staatsburgerschap beroofd. #

Brazilian Central Bank reduces benchmark interest rate to 11.5% per year

The Central Bank announced a reduction of 0.5 percentage points of base interest rate (Selic) from 12% to 11.5% per year. The announcement was made by Copom (Monetary Policy Committee) late on Wednesday October 19th.

With an eye on economic growth next year, the Central Bank decided to maintain the downward trend in interest rates – the benchmark for banks to fix the cost of borrowing for businesses and individuals in the country.

After surprising the financial market in the last Monetary Policy Committee meeting in August, the decision of the directors of the Central Bank was as expected.

Although most analysts still disagree with the diagnosis of BC for inflation next year, the expectation was further drop in interest rates. Especially after the warnings made by the president of the institution, Alexandre Tombini, that moderates in the Selic rate cuts are “consistent with the convergence of inflation to the target of 2012.”

Given the expectation of a BC steepest decline in world growth, reflecting the level of activity in Brazil, it was speculated that the magnitude of the cut could be higher, reaching a percentage point.

It was not what happened.

The decision of the Monetary Policy Committee, recently announced, indicates that the scenario with which the officers worked at the end of August has not changed much. Instead, only if confirmed. Therefore, maintaining the pace of decline in interest rates. Within the government, the assessment is that, from now on, the difference between the forecasts made by market analysts for inflation next year and officials should begin to reduce.

While the target for the CPI (price index reference to the government) in 2012 is 4.5%, the Central Bank has been working with the market with 4.7% and 5.61%. The official target is a range of two percentage points, meaning that the Central Bank has to calibrate the interest rate to ensure that inflation will reach a maximum of 6.5% next year.

For the government, although the market still reviewing their weekly estimates of inflation up to 2012, the rate of rise is stalling. As the unfolding international financial crisis means less economic growth in the world, it is believed that the projections should be even closer to the official figures.

For the Central Bank, the differences are natural-looking face of a “new and complex scenario” as lived in the world since the end of 2008.

While the Central Bank believes the world will live an extended period of low growth, which will help to reduce inflation in major economies, including Brazil, economists argue that the slowdown in activity level in Brazil will be stronger in the second half of this year.

In 2012, the pressure increases will continue, driven by real wage increases achieved this year and demand is still warm.

Following Japan, Korea disputes IPI increase at WTO

As expected more and more countries are lining up to challenge the unreasonable protective measure by the Brazilian government to increase the Tax on Industrialised Products (IPI). Last month, Brazil raised the so-called IPI by 30 percentage points for imported cars that aren’t made with at least 65% local content. Excluded are those from companies that produce locally or in Mercosul partners. Established carmakers such as Volkswagen, Fiat,General Motors Co. and Ford, which together account for about three-fourths of car sales, had complained about the influx of cars as Brazil’s currency strengthened and demand jumped.

Japan may be the first country to challenge at the World Trade Organization the Brazilian this increase in the IPI tax. In addition to Japan, South Korea also objected to the increase for imported cars decided by the Brazilian government. The two countries that are producers of automobiles, said that Brazil violates the agreement of trade-related investments as well as an article of the World Trade Organization (WTO) on national treatment of companies.

Both Korea and Japan has decided to challenge the measure of the Brazilian government in the Market Access Committee , which periodically examines new barriers raised by the countries. The report itself noted that the Japanese action could pave the way for other governments complain of Brazil, as it did. Japan will ask judges at the WTO to examine the measure. Though most Japanese car makers produce locally, exempting them from the tax, the country’s government is concerned that a similar measure could be repeated by other countries. The issue was raised with Brazil during a meeting of the WTO’s market access committee on Friday, said Atsushi Saito, Japan’s representative at the Geneva-based organization. In addition to Japan, members from South Korea, Australia, Europe and the U.S. also voiced their concerns, Saito said. When asked if Japan planned to file a formal complain with the WTO, Saito replied in an email that “If you understand that ‘formal complaint’ is part of a dispute settlement process, we don’t have any plans at this stage.”

More than 20% of cars sold this year are imported, up from just 5% in 2005, according to automakers association Anfavea. But the tax hike was challenged by car companies who are building or plan to build factories in the country and who say that because they won’t be able to meet the full local content requirements during the first few years of operations, they would cancel plans to bring production onshore.

Government willing to negotiate?

The government has since said it would negotiate with those companies to reach a compromise. This is also confirmed by China’s JAC Motors. JAC Brazil says it has finalized a deal to build a $500 million car factory in Brazil. JAC Brazil says in an emailed release the factory will be built in the northeastern state of Bahia. The plant should be ready by 2014.The automaker said in August it wanted to build a factory in Brazil. But those plans were questioned after Brazil hiked the import taxes on foreign cars, threatening the Chinese-made vehicles JAC ships to Brazil. JAC says in its Friday statement it hopes the decision to invest will convince officials to scrap that tax hike.

BMW considers building a factory in the country, but..

BMW asked Brazil’s Trade and Development Minister Fernando Pimentel to reevaluate the increase in the IPI tax as it considers building a factory in the country, O Estado de S. Paulo reported, citing Henning Dornbusch, chief executive officer of BMW’s Brazil unit. The Brazilian government’s decision to raise the tax on cars with less than 65 percent of their parts produced in Brazil may lead BMW to build its plant in China, India or Russia instead, according to the newspaper. The company will announce its decision by November, O Estado said. The Ministry of Trade and Development’s press office said Pimentel hasn’t made any commitment relating to BMW’s request because the decision must be made in conjunction with Finance Minister Guido Mantega, O Estado said.

 

Twitter Updates for 2011-10-09

Chinese Car Maker JAC to Build in Brazil – WSJ.com

Chinese Car Maker to Build in Brazil – WSJ.com.

SÃO PAULO—Anhui Jianghuai Automobile Co., the Chinese auto maker known as JAC, and its Brazilian partner said Friday that they decided to go ahead with plans to build a factory in Brazil on hopes that the government will modify a production tax.

SHC, the company that imports JAC automobiles into Brazil, said it would invest 80% of the 900 million Brazilian reals ($509 million) needed to build the factory, with JAC providing the rest. The factory will be built in the northeastern Brazilian state of Bahia, with output set to begin in 2014.

Brazil’s market—the world’s fourth-largest by sales—has attracted heavy investment. Sales are expected to grow 5% this year, slowing from last year’s 12% expansion as the government raised interest rates earlier this year to rein in an overheated economy.

The JAC factory, with initial capacity of 100,000 vehicles, will be in the city of Camacari, an industrial area where Ford Motor Co. has a plant. JAC will assemble and paint the cars locally, with stamping and motor-production capacity set to be built later.

JAC began selling cars in Brazil in March of this year, and through September had sold 17,421 vehicles. With four models sold locally, JAC accounts for 0.9% of all cars sold this year, according to auto dealers association Fenabrave.

SHC and JAC will also build a research center to locally develop parts such as flex-fuel engines–the predominant kind in Brazil, which can run on gasoline, ethanol, or a mixture of the two–as well as a design center and a test track.

The factory plans had been announced in August by SHC president Sergio Habib, although a location had yet to be decided upon. A month later, however, Brazil said it was raising the a tax on autos by 30 percentage points—to a range of 37% to 55%, from 7% to 25%—exempting only cars that used at least 65% locally produced content.

Mr. Habib said last month that the tax would also hurt auto makers that in recent months had begun building factories in Brazil, such as South Korea’s Hyundai Motor Co. and China’s Chery Automobile Co. Mr. Habib later said he may cancel plans to build the factory because it was impossible for any company to begin production with 65% local content.

Brazil’s Trade Ministry said earlier this week that it was considering making the rules more flexible. News reports said the government may consider gradually increasing local content requirements for newly installed factories.

Also Friday, Mr. Habib said Friday that he is in talks with India’s Tata Motors to import the company’s cars. Tata officials weren’t available to comment.

Steve Jobs is not Brazilian:The Apple founder Steve Jobs, died without seeing his company operate normally in Brazil.

Steve Jobs is not Brazilian

Icon Steve Jobs

Steve Jobs died

The Apple founder Steve Jobs, died without seeing his company operate normally in Brazil. The he is rightly being hailed as a revolutionary genius who transformed the way we sell and consume culture and technology. That’s a lot. But one thing he could accomplish was to make his business occupy the space it deserves in the phenomenal Brazilian market. And that says a lot more about Brazil than Jobs.

To date, Apple products are commercialized by third parties in Brazil, as the American company was unable to develop a viable business model in the homeland of the high taxes and poor business environment.

Brazilians pay double or more than Americans for an Ipad created by Jobs and his team. The last stand for the normalization of the action here was Apple’s announcement, over hyped to say the least, the construction of an IPad factory here.

The announcement came during Rousseff’s trip to China in April. In the absence of any tangible result of the visit, it was announced with great fanfare and no substance that Foxconn, the Taiwanese company that manufactures iPads would open a new factory in Brazil to produce them here. It was what Dilma and PT needed to capture the emerging middle class in the country.

As I wrote here at that time, Apple cannot sell its products in Brazil because of its poor economic conditions, called on the Taiwanese company that manufactures and iPods, IPads in China to produce them here and so get around the precarious economic environment and still be sold as an asset of Dilma’s visit to China. There is the “spin”!

The factory as of today is still obviously a promise. First there was talk of initial production in November, then that BNDES would finance the US$ 12 billion investment, then came the talk that there was no skilled labor in the country to implement the project, then start the operation would begin with Mexican “maquiladoras” only assembling the products here.

The fact is that Steve Jobs is dead, and Brazil is still largely excluded the Apple revolution. While we continue with one of the most expensive and slowest internet connections in the world.

These are the things that explain why we are behind despite the huge advances in recent years, and our dependence on blessed commodities, which without them we would have disastrous trade deficits.

If Jobs was able to transform so much, who knows that maybe this commotion with his death will illuminates the heads of our bureaucrats and accelerate liberalization of the Brazilian market and digital technology.

Taxing technology is taxing knowledge, innovation and the future. It closed the borders to Steve Jobs.

Attributions:

BR ECON: Steve Jobs | Expat Living in Goiânia, Brazil. /

Article by Sérgio Malbergier, Folha de São Paulo, published on Expatbrazil

Sergio Malbergier is a journalist. He was editor of the special money section of Folha (Dinheiro – 2004-2010) and Mundo (2000-2004), correspondent in London (1994) and Special Envoy for Folha in Iraq, Israel and Venezuela, among others. He has directed two short films, A Árvore (The Tree -1986) and Carô no Inferno (Dear Hell – 1987). He write for Folha.com on Thursdays.

Twitter Updates for 2011-10-06

  • Finished the updates on taxes on my knowledge page Doing business in BRazil. Pffff #

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