With a population of more than 190 million and a rapidly growing middle class, Brazil is sparking the imagination of many foreign investors. But Rio Grande do Sul, one of the country’s richest and most industrialised states, still remains unknown to many. This is despite the fact that more than 15% of the country's exports come from the state – which boasts sizeable automotive and electronic clusters – and the metropolitan area around its capital, Porto Alegre, is among the largest in the country.

Taking centre stage


Between 2003 and 2011, the level of crossborder investment into Brazil's largest city, São Paulo, was more than 10 times that into Rio Grande do Sul, according to greenfield investment monitor fDi Markets. But the state's governor, Tarso Genro, believes that the situation is about to change, in no small part down to the opening in June 2011 of the first ever non-stop flight between Rio Grande do Sul and Europe. The route was launched by Portugal's state-owned airline TAP Portugal.

“Our state had not been considered as a port of entry to Brazil, because of the lack of a direct flight from Europe. Now such a route has finally been established,” says Mr Genro. The route has been opened in preparation for the 2014 FIFA World Cup in Brazil, which, according to Mr Genro, will help the state demonstrate its potential during the games. “Apart from that route, the 2014 FIFA World Cup will allow us to expand our tourism sector and gain publicity, [allowing us to] showcase what our state has to offer,” he says.

Officials in Rio Grande do Sul are hoping that the region will be able to market itself during the World Cup as a state in which it is easy to do business, particularly compared with other parts of Brazil, where those wishing to start up a new business can get caught up in swathes of red tape. The World Bank's annual Ease of Doing Business assessment shows that foreign investors in Brazil face particularly big problems when setting up companies, obtaining construction permits and registering property.

Mr Genro says that his state is actively addressing these issues. “We have recently launched a programme aimed at [facilitating investment]. Now, during just one meeting, investors can meet with the state officials in charge of various fields, from the environment to property registration,” adds Mr Genro, who goes on to explain that before setting up this one-stop shop, the same process could have taken up to three months.

Tax aid

Another much-needed improvement to Brazil's business environment – the simplification of the country's tax regime – is essential to attracting investment, according to Mr Genro. However, despite the governor's powerful position within the country's federal political system, the tax regime is in the hands of the central government and such improvements are being made, albeit slowly.

“In our state, we describe Brazil’s tax system as baroque, since it is very complex and changes a lot. Our tax and fiscal system needs to change, as it is outdated and reflects the view of development from the perspective of the capital city, not the regions,” says Mr Genro. He hopes, however, that under the leadership of president Dilma Rousseff progress will soon be made on this front.