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Brazil according to Baker McKenzie

Monday 15 November, 2010

I had breakfast with the attorneys @ Baker & McKenzie to attend BRAZIL TAKES OFF: OPPORTUNITIES AND STRATEGIES FOR SUCCESS They opened with the Consul General from Brazil in Chicago, who was most proud of Brazil’s recently completed online elections.  They had the results of their election by 6:00 p.m. & the politicians were making their speeches by 7:00 p.m.

re: investment :

  • politically stable
  • investment ratings positive
  • Brazil was LIFO in the financial crisis, last in & first out
  • the economy is growing faster than the average of even emerging economies
  • foreign direct investment is expected to grow until 2014
  • the Real has gained 6.3% vs. the $US in the last 3 months
  • inflation is under control

re: the 2014 World Cup & 2016 Olympics set deadlines which must be met

  • Sao Paulo is getting $20B investment, which is about equal for the rest of the country, for the World Cup
  • opportunities are in building arenas, airports, hotels, &  urban mobility ($22B in trains, subways, highways)
  • tax incentives are being granted to ensure completion

Target industries are oil & gas, power, real estate, mining, steel, stock exchange.

re: real estate & infrastructure, major projects are in power plants & transmission, pipelines, water.

  • the real estate market is stimulated by growth of the middle class & an increase in credit offers
  • there is a national deficit of almost 8M houses in Brazil
  • the government is investing & providing incentives to reduce the housing deficit
  • shopping malls are growing 10+%/year in gross sales

The Brazilian stock & derivatives markets are the largest in Latin America & the Omega Project seeks to become 1 of the world’s largest in 5 years

re: taxes, Brazil’s system is complex @ federal, state, & municipal levels with indirect (VAT), & overlapping taxes

re: managing the workforce, labor rights are defined by law & collective bargaining, & may not be waived

  • labor contracts/job offers are of indefinite duration for 8 hours/day, 44 hours/week
  • remuneration must include annual inflation adjustments, bonus rights can not be withdrawn
  • employees can be terminated with & without cause without & with severance, respectively
  • all employees are represented by a union, including top management, with mandatory contributions, depending on jurisdiction
  • common disputes include:  overtime, outsourcing, liability, harassment, damages, pay equality, asset seizures

re: environmental protection, polluters pay, for preventive measures too.

  • information provided to public authorities is public
  • natural resources must be sustainable & not exhausted
  • trends include increased identification of contaminated areas, climate change laws at all levels, Superfunds, mandatory self-disclosure, Forestry code modifications for enforcement

Baker McKenzie’s new Chairman of their Executive Committee, Eduardo C. Leite, hails from Brazil, where the firm has 4 offices.

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