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Uberaba has become a gateway for companies serving the Cerrado agriculture region. Not satisfied with the road links and dry port, the city government now wants to open the local transport and logistics infrastructure to international investors. Jacopo Dettoni reports.

Uberaba has over the years made itself the gateway to the Cerrado region, an agriculture-dominated area that has boomed in the past few decades. Local authorities leveraged the city’s position and strategic transport infrastructure to attract producers serving the region’s agricultural and consumer markets that typically rely on imported raw materials. They also managed to make it a two-way relationship by paving the way for private operators to open up international markets to a narrow but growing base of local exporters. But the city’s trade balance is still heavily skewed towards imports, and the municipal government is now betting on the development of an export processing zone (EPZ) to further deepen Uberaba’s connection with the international markets and the global footprint of its companies.

“The EPZ can become a fertile area for producers willing to add value along the whole value chain of grain and cattle production, although it could be used by producers across the sectors to conquer shares of the global market,” says José Renato Gomes, secretary of economic development and tourism at the city's government.

Beyond the customs benefits typical of EPZs, Uberaba’s will offer investors fiscal incentives both at a municipal and state level to facilitate the operations of companies located within its 2.6 square kilometres and exporting at least 80% of their production. The benefits are guaranteed for at least 20 years.

Help wanted

The city government is now looking for private input on the EPZ. “We are looking for a private partner to develop and run the EPZ. As city government, we want to be shareholders, but it’s not our job to run it,” says Mr Gomes. “We have a product that is a raw diamond. Now we are looking for somebody able to cut it.” While waiting for a developer to take over the EPZ, the city government is already talking to Austrian company Lenzig to move in a planned $1bn investment in a cellulose factory under a joint venture with Brazilian wooden panel producer Duratex.

Indeed, the EPZ has further augmented Uberaba’s cost attractiveness regarding Brazil’s major industrial centres, which has already prompted producers with a global footprint to set up shop in the area.

“We moved here in 1996 from São Paulo to reduce production costs,” says Fernando César Bortolozzo, managing director of industrial operations at the local facility of US industrial tools and household hardware group Stanley Black & Decker. “Labour is 35% to 40% more expensive in the São Paulo region, and unions there are much stronger too. We wanted to be far from big industrial centres, and make the most of the incentives offered us by state and city authorities in Uberaba. Besides, the city is 500 kilometres away from Brasilia to the north, Belo Horizonte to the east and São Paulo to the south, which makes it a strategic place from which to serve these major cities, and that was also an important element in our decision to move.” The Stanley Black & Decker facility is one of the largest employers in the area, with a workforce of 1100. 

Legal boost

The local administration, led by mayor Paulo Piau, has renewed an existing law to further boost the city’s investment proposition by facilitating, among other things, land acquisition and offering new fiscal incentives to support the investment phase of new projects. The administration’s pro-business attitude has already borne fruit with relation to the investment decisions of major local investors.

“We are a company from Uberaba and we already have a certain human capital in the area. It would have been difficult to relocate outside the region,” says Fabrício Simões, executive director of Ubyfol, a producer of crop nutrients that started life in Uberaba in 1985 and today employs 191 people. He is referring to investment in a new production facility that the company undertook a few years ago, when management was considering alternative sites outside the city.

“The municipal incentive law allowed us to get a space for the new facility [in the city’s industrial district] at favourable condition,” says Mr Simões. “That law differentiates Uberaba from other municipalities, where the governance of industrial districts is still in the hands of higher levels of government, putting them in a position to offer autonomy and speed in the process related to these areass”. 

Ubyfol eventually invested 30m reais ($8m) in the construction of its current manufacturing facility. Uberaba became the first city in the whole state of Minas Gerais to gain autonomy in the governance of its three industrial parks and introduced special incentives for their occupiers in a process that wrapped up in early 2018.

Strengthening links

Additionally, the EPZ is further strengthening Uberaba’s links with international markets. These links have received a major boost in recent years with the development of a dry port operated by local private firm Porto Seco do Triângulo, which is able to handle customs clearance procedures for goods proceeding to and from Santos, Brazil’s largest port. This saves local importers and exporters time and expense on their customs operations. More recently, the city has seen the development of a transhipment terminal for bulk agriculture products by Brazilian logistics powerhouse VLI Logistica.

“We are in a strategic place to capture loads from the states of Goiás, Mato Grosso and Minas Gerais and bound to the Santos port and onto foreign markets,” says Douglas de Carvalho Marques, managing director of the transhipment terminal. The terminal opened its doors in 2014 after VLI Logistica invested 160m reais in its development. It is able to tranship 700 trucks loaded with grain and another 200 with sugar on to trains bound for the company’s terminal in Santos every day, making it the largest terminal of its kind in the whole of Latin America.

The only weak link in the overall infrastructure offer of Uberaba is the lack of an international airport. The city airport has only scarce connections with other cities in Brazil and cannot be expanded, as it is located in the middle of the city. The city government is now leading talks to build an international airport for passengers and freight between Uberaba and Uberlandia, the second largest city in Minas Gerais, 100 kilometres north of Uberaba, and hence upgrade the area’s logistics offering even further.

This article is sourced from fDi Magazine
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