What kind of impact do you think the global economic slowdown will have on your FDI inflows and how are you working to offset any negative impact?
FDI inflows will certainly decline because of the liquidity crisis and the decline in business and consumer confidence around the globe, especially in developed countries. However, I am very confident that soon it will become clear that Brazil is actually a safe haven for savings. The long-lasting benefits of a transparent market, strong corporate governance and the rule of Law, combined with the size and dynamism of Brazil’s economy are the best protection for foreign investors. In a world of uncertainty, these factors are very valuable and strengthen the advantages of the food and energy independence of Brazil. In the case of Rio de Janeiro, I am confident that the opportunities of oil production, the diversified industrial base and solid fiscal stance are an asset for those looking for opportunities in a world that is changing very fast.
From which regions do you expect most of your FDI to originate in 2009?
We will continue to attract investment from the developed world. The steel mill of ThyssenKrupp in Rio, for instance, is the largest private investment in the hemisphere in its sector and probably the German company’s largest. ThyssenKrupp is keeping to the construction schedule and operation should start by late 2009. Rio has also reached out to investors in Asia and other growing markets, and the response has been very positive. The city has a long-standing relationship with Japan, Singapore, and more recently, large Russian companies have been attracted by the oil supply industry.
What measures implemented by the government on a national level would you like to see, which you think would improve the investment climate in Rio?
Growing liberalisation of financial operations related to insurance and reinsurance services would allow Rio to serve third markets in a very effective way. Also, there is confidence that any regulation related to the extremely large oil reserves of the Pre-Sal should build on the successful model under which the industry has operated in the past few years. Brazilian and foreign companies will benefit greatly from stability in this and other regulatory areas. It is an asset the country conquered in the past decade, that we are willing to preserve. More generally, a balanced fiscal policy and continuing reforms that reduce the cost to operate in Brazil is a priority.
What do you consider to be your priorities in 2009 in terms of business, investment and trade initiatives to improve and continue inward investment flows?
Our priority is to ensure that a number of investments find appropriate sites in Rio. These investments range from the shipyard to build submarines with the French; to the industrial area around the mega-project of Açu Port, developed with Anglo American and LLX; as well as a number of factories and factory expansions that firms have indicated they want to build despite the slowdown of the world economy. We are also working with the new mayor of Rio to create a better business environment, to improve transport infrastructure and address – in a very straightforward way – the issue of public security, where we have already harvested some encouraging results. We are also developing new projects in IT and other technology-intensive industries with the city of Rio, to take advantage of the existing large academic and technology base, that has not been adequately promoted in recent years.
What effect do you think the new US administration will have on your investment flows, if any?
The action of the US administration can have a huge impact in investment flows. It has the difficult task of conducting a long-delayed macroeconomic adjustment while avoiding the risk of a financial collapse of the world. We are confident that the new administration is well-prepared to face this challenge without resorting to protectionist measures. I believe that governments can use the current crises to make big strides towards changing the way business operates, promoting new technology while even reducing global heating. I am sure that this matter of global co-ordination will be one of the major issues discussed in the World Economic Forum-LATAM to be held in Rio in April with the presence of Brazil’s President Lula.