While Brazil’s larger cities such as São Paulo and Rio de Janeiro will remain beset by negative perceptions of their bureaucracy and growth potential, the city of Belo Horizonte in the state of Minas Gerais will become a draw for investors, according to officials from the Minas Gerais State Integrated Development Institute (INDI). The south-eastern state is expected to outperform the country as a whole this year, thanks to the significant strides made to become more business friendly. And as issues such as high labour and real-estate costs erode the competitive advantage of Brazil’s coastal cities, investors will look to places such as Belo Horizonte as alternative FDI destinations.
“Minas Gerais’s economy is growing faster than the Brazilian economy,” said Renato Byrro, specific projects and regional development manager at INDI. “[Brazil’s] GDP last year was less than 1% and Minas Gerais’s was more than double [that], so that is something that points to how we have worked to improve the economy,” said Carlos Romualdo, institutional and international relations manager at INDI.
Preparations for Brazil’s 2014 football World Cup have been a crucial selling point. Belo Horizonte is one of just two hosts – of the six participating cities – that delivered its completed stadium to FIFA officials on time, showcasing the state’s professionalism and ability to hit deadlines. These qualities, according to Mr Byrro, will be key in solidifying the state’s reputation as an alternative investment destination. “We are working hard to be different from this culture of not fulfilling commitments in Brazil,” he said.
While in other host cities, preparations for the World Cup have been shrouded in controversy, including a roof collapse at Salvador’s stadium just three weeks before the city held its first Confederations Cup match, as well as a shortage of hotel space in Rio de Janeiro, Minas Gerais is delivering projects to a high standard, reflecting its improving business environment, according to INDI officials.
“We are trying to show how the government has worked to make things happen,” said Mr Romualdo. “For instance our stadium was the second one to be ready for the games, as promised.” According to Mr Byrro, the government of Minas Gerais has fostered an attractive investment climate, and the World Bank has commended the state for its efforts.
“You can start a business in less than two weeks in Minas Gerais,” said Mr Byrro. “You take almost one month in other states, according to World Bank’s Doing Business report. You take fewer than 20 procedures to start a business in Minas Gerais, and in São Paulo, for example, you need more than 150 procedures to start a business.”
Even if Belo Horizonte has in the past been overshadowed by big cities such as São Paulo, INDI’s officials are confident the city will serve as a hub for business process outsourcing, professional services and life sciences in coming years. Minas Gerais offers investors a cheaper yet highly skilled workforce, and it is less than an hour’s flight from Rio de Janeiro and São Paulo. This, coupled with the fact that it is focused on developing world-class facilities for companies from Brazil’s main trading partners including the US, the UK and France, will make Minas Gerais a rising performer for Brazil in the coming year.
“There is a movement of companies in Brazil, looking for places with high skilled labour and low labour costs, and some of them are moving from São Paolo and Rio de Janiero, to cities like Belo Horizonte,” said Mr Romualdo. “There are lots of initiatives which are being done [by INDI], and we are showing that we are different.”