São Paulo, Brazil

CONCEITO BRAZIL

Top Exports from Brazil

Orange

Soy

Corn

Sugar cane

Airplanes

Coffee

Oil

Iron ore

Ethanol

Meat

1. Crisis and Recuperation

2. Economic Development

3. Trading Partners and Best Prospects

Doing Business in Brazil

Industrial Production During the Crisis

IBGE indicated growth of 0.7% in March

-14

-12

-10

-8

-6

-4

-2

0

2

4

Jan-08 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-09 Feb Mar

By category, in 1st trimester 2009 compared to same period of 2008, in % :

General industry: - 14.7 Consumer goods: -8.0Capital goods: - 20.8 Durables: - 22.5Intermediate goods: - 18.1 Semi and non-durable: -3.0

Retail GrowthDuring the Crisis

Car SalesDuring the Crisis

Car production increased 34.2% between February and March.

08 09

Invest Confidence

• The main São Paulo Stock Exchange Index, the Bovespa, has risen more than 75% from its low point last October.

• Since January, R$ 5.7 billion has been invested in the Bovespa from overseas

• Bovespa (Blue) vs. Dow Jones Industrial Average (Red).

Brazil’s Reaction to the Crisis

Government measures:

• Tax cuts such as IPI, the federal tax on domestic and imported manufactured products.

• Interest rate reduction – 9.25% per year.

• Incentives for civil construction.

• Infrastructure development.

GDP growing projection for 2010The world recovering

Source: Agencia Estado

Brazilian GDP

Source: IBGE

6.1% 6.2%6.8%

1.3%

-1.8% -1.6%

0.5%

5.0%

6.5%

1º Qtr 08 2º Qtr 08 3º Qtr 08 4º Qtr 08 3º Qtr 09 4º Qtr 09 1º Qtr 10

1º Qtr 09 2º Qtr 09

• GDP: US$ 1.58 Trillion (IMF)

• Growth Rate: 4.83 %

• Inflation Rate: 4.60 % year

• Foreign Direct Investment : US$ 35 Billion

• Interest rates, SELIC at 8.75 % year

• Foreign Exchange Rate: 1 USD = 1.75 Reais

• Unemployment Rate: 7.42 %

• 190 Million Consumers with Increased Purchasing Power

Economic Indicators2010 Estimates

Source: Central Bank Brazil

Brazil Compared - GDP(US$ Billion)

Source: International Monetary Fund

Brazil’s Rate of Growth

Source: IMF, Consensus Forecasts, IBGE

0.0%0.3%

4.3%

1.3%

2.7%

1.1%

5.7%

2.9%

3.7%

4.5% 5.1 %

0%

1%

2%

3%

4%

5%

6%

7%

8%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Annual Perc

ent

2.6% average

1 %

2009

Inflation Rate

Source: Agência Estado

4.50%

1.80%

8.50%

6.00%5.50%

3.50%

7.75%

4.82%4.35% 4.60%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 BCB est.

2,477%

1993

Source: Central Bank Brazil

32.8

22.5

16.6

10.1

18.115.1

18.8

34.6

41.7

25.0

35.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 est.

Foreign Direct Investment(US$ Billion)

Prime rate in Brazil has reached the lowest historic level (in %)

8.65%

8.8%

9.3%

10.3%

13.0%

11.8%

11.5%

14.8%

19.8%

25.5%

18.5%

19.0%

Nov-09

Jul-09

Jun-09

Apr-09

Jul-08

Abr-08

Jul-07

Jul-06

May-05

Jan-03

Jun-02

Jul-01

Interest Rates

• The SELIC rate is currently 8.75 % (per year).

• Mortgage loans range from 8% to 12% per year for up to 25 year loans plus inflation.

• Businesses generally pay from 2% to 4.5% (per month), depending on creditworthiness.

• Checking account rates are about 140 % year.

• Credit Card rates are 233 % per year.

Source: Central Bank Brazil

R$ 3.50

R$ 2.75 R$ 2.60

R$ 2.25 R$ 2.14 R$ 1.95

R$ 2.30

R$ 1.74 R$ 1.75

2002 2003 2004 2005 2006 2007 2008 2009 2010 est.

Foreign Exchange Rate

Source: BCB

Southeast – 55,09

South – 19,03

Northeast – 13,68

Center-West – 7,28

North – 4,92

Regional DisparitiesGDP share - % of total GDP - 2008

Source: International Monetary Fund

2004 2008 2009

3,710,477,153

20,041,091,354

15,911,145,829

11,530,564,312

25,625,203,865

20,182,730,487

15,990,157,812

36,187,476,416

29,216,602,946

China United States (including Puerto Rico) European Union

Brazilian Imports by Economic Blocks

2003 2004 2005 2006 2007 2008 2009

11.21

13.9015.37

19.23

24.63

32.91

21.0017.91

21.16

24.4426.37 25.64

30.46

16.00

USA Exports USA Imports

Bilateral Trade(US$ Thousands)

Office of Trade and Industry Information (OTTI), U.S. Department of Commerce

0

20

40

60

80

100

120

140

160

2007 2008 2009

U$ Th

ousa

nd

Mexico Brazil Venezuela Colombia Chile Argentina Peru Ecuador

Brazil Compared: U.S. Exports to Latin America

Source: Foreign Trade Division, U.S. Census Bureau

1. Agricultural Sector2. Aerospace (Aircraft and Parts / Airports)3. Electrical Power Systems 4. Environmental 5. Franchising6. ICT - Information & Communication

Technologies7. Insurance8. Medical Equipment9. Mining10. Oil and Gas 11. Pharmaceuticals12. Safety & Security13. Transportation (Ports / Railways) 14. Travel and Tourism

Best Prospects for Sales to Brazil

The Brazilian Oil and Gas Sector(November 2010)

• Over 60 oil companies with oil exploration and appraisal areas in Brazil.

• Petrobras 2009-2013 investment: US$174 B (US$ 92 in Brazil’s E&P). Other oil co’s: Est. US$34.5 B.

• Opportunity: 819 oil blocks auctioned; Petrobras plans to contract about 300 new vessels (e.g. oil drilling and production platforms, ships, platform support boats, and very large crude oil carriers) .

• Pre-salt oil fields: Petrobras plans to invest USD$ 111.4 billion from 2009 to 2020 to produce 5.7 million bpd plus 1,815 million bpd from pre-salt fields. This figure includes Petrobras and its partners’ pre-salt production.

• Challenge: Heavy emphasis on local equipment content.

• Complex suppliers’ registration process with Petrobras.

The New Frontier: 100 Billion Barrels? (A 500-mile wide area in Brazil, located under a thick layer of salt -- 350 miles off of Brazil’s southeastern coast, stretching from Espírito Santo, Rio de Janeiro, São Paulo, Paraná, and Santa Catarina States, at an

Pre-Salt Reserves

average water depth of over 7000 feet. About 25 percent of the pre-salt area has already been contracted to private companies through Brazil’s competitive bid round process. )

2010 Best Prospects for E&P Equipment

• Production pipelines alloy coatings

• Turbo compressors (6-10 Mw)

• Polyester mooring cables

• Mooring systems• Drilling pipelines• Electrical cables • Control systems for well

control

• Oil and gas metering systems

• Offshore drilling rigs• Gravel packing• Drill bits• Steam generators (25-50 x

10 6 BTU/d);• Special sphere subsea

valves• Subsea sensors for

analysis of oil and grease traces in water

Best Prospects for E&P Services

• Drilling

• Workover services

• Flexible lines and umbilicals laying services

• Support to ROV vehicles

• Support to mooring activities

• Special vessels

• Monitoring and inspection techniques for

structural integrity of flexible risers

World Cup 2014 and Olympic Games 2016Business Opportunities in Rio

• Rio de Janeiro will host the first-ever Olympic

Games in South America August- September

2016, as well as some of the games for the

2014 World Cup. These two events will

generate numerous trade and investment

opportunities in several areas, for both games

and the city.

Estimated investments

• The state government of Rio de Janeiro

estimates that investments from 2010-2016

will reach US$50 billion in infrastructure,

construction, transportation, public security,

education and training, among others. Most of

those investments will occur through Public-

Private Partnerships (PPPs) under Brazil’s

Growth Acceleration Program (PAC).

Investments in Building and Construction

• There will be a huge demand for

Architecture/Construction/Engineering

(ACE) services to plan and build sport

facilities (arenas, stadiums, etc),

hotels, infrastructure and

transportation projects, as well as port

and airport upgrades.

Investments in Sport Facilities

Although more than half of Rio 2016 venues are ready, since Rio hosted the 2007 Pan American Olympic Games, about 20 new facilities are to be built. They include:

•An aquatic sports stadium with 18,000 seats with an estimated construction cost of US$40 million.•An Olympic Park to host gymnastics, cycling, handball, and other sports competitions with an estimated building cost of US$200 million.•An Olympic village of 32 buildings with 12 floors each and a capacity of over 17,000 beds estimated at US$450 million.•An Olympic Tennis Center with 16 courts (US$45 million).•A renovated rowing stadium at Rodrigo de Freitas Lagoon will cost approximately S$2 million.• An arena in Copacabana for beach volley (US$7 million).•The renovation of Maracanã Stadium (where the opening and closing Olympic ceremonies will be held as well as soccer games) will cost approximately US$400 million, and must be completed before 2014 to use in the 2014 Soccer World Cup.

Investments in Hotel/Hospital Facilities

• In 2010, the number of visitors to the city is expected to grow

in 10% in comparison to 2008, when 1.68 million tourists came

to Rio. By the time of the 2014 Soccer World Cup and the 2016

Olympic Games this number will increase even more.

• Several hotels are being refurbished.

• The municipality of Rio may reduce taxes to attract new

investment in hotels; thereby creating opportunities for U.S.

hotel chains in refurbishment, architectural projects and

building or acquiring existing hotels.

• As for hospitals, a clinic will be built within the Olympic Village.

Investments in Infrastructure

The estimated investment in infrastructure is about US$15 billion, including US$5 billion in logistics upgrades at seaports and airports. The main projects include:

•The modernization and enlargement of the two International Airport terminals (increasing the airport's capacity from 15 million passengers per year to 25 million),•Highway widening,•Construction of “Olympic lanes”,•The Port of Rio area revitalization to include a new 30,000 square meter leisure area featuring bars, restaurants, an amphitheater, a multi-use space and parking,•Port dredging,•Construction of two new subway lines,•The creation of a Bus Rapid Transit (BRT) system,•Housing projects (including low income housing) and•Water sanitation.

Infra-structure Matters in Brazil

BR US Difference

• Soy production costs 187 238 51 dollars cheaper in Brazil• Transportation costs 97 26 71 dollars cheaper in U.S. • Port costs 7 3 4 dollars cheaper in U.S.• Total 291 267 24 dollars in favor of USA

Conclusion:

To produce soy in Brazil is 51 dollars cheaper, but the logistic costs eliminates this advantage. In the end, it is 24 dollars cheaper to get the product to market in the US.

Source: Veja Magazine

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