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On September 11th, the Chamber was honored to host Luiz Levy, President of Gazeta Mercantil S.A. at a luncheon held at the Miami Inter-Continental Hotel. Mr. Levy spoke to Chamber members and guests about a broad array of infrastructure spending currently underway that will underpin Brazil's economic growth into the next millenium.
Mr. Levy preceded his remarks by asserting his view that Brazil is undeserving of the current economic turmoil spreading to its shores from abroad and blames misinformation on the part of global investors for much of the negative press the country has been receiving.
Mr. Levy presented the results of an extensive report prepared by Gazeta Mercantil that states that $430 billion has been targeted for infrastructure investment throughout Brazil over the next five years through 2003. The various investments range from hydroelectric projects to highway, pipeline and rail transportation schemes to river and seaport expansion and modernization. Beginning with Brazil's northern tier states including the Amazon basin, infrastructure development is well underway in that remote region to develop it further and to link it via road and rail to Venezuela and various northwestern states. Among the projects include:
- Railway linking Marabá to port of Itaqui
- Improvements to BR-364 and BR-070 connecting Acre to Brazil's southeast; and BR-174 connecting Roraima to Caracas
- Transmission line connecting Itaituba, Santarém and Tucuruí in the state of Pará
- Transmission line connecting Boa Vista with Guri, Venezuela
- Water pipeline from Amazon River to Porto Velho
- Irrigation lines from Rio Tocantins to Matto Grosso and Goiás
- Gas pipeline terminal southwest of
Manaus
A petroleum link is also being built from the region to Venezuela. Most of the projects in this area are oriented towards the development of agriculture with investment coming from China, among other nations, and which is spurring collateral domestic investment. A burgeoning population in Manaus is drawing substantial investment and is creating a huge market for goods by stimulating demand from elsewhere in Brazil.
In Matto Grosso, additional agricultural projects are being put in place in conjunction with new and advanced highways to enhance distribution links to neighboring states. The projects include:
- Railway linking southern Matto Grosso with the Paraná River
- Improvements to Tietê-Paraná waterway
- Railways connecting Cuiabá, Matto
Grosso to Pará, Rodonia and Minas Gerais
The new transportation networks are anticipated to halve the shipping time of goods abroad out of the area from the current 27-day average to 14 days. In Pará, rich in minerals and a major agricultural state, a direct road link is being constructed to connect it with the northeast coast while new rails will connect it to points south. In addition, a new gas pipeline is being put in place that runs from Santa Cruz, Bolivia, through Matto Grosso do Sul connecting it to São Paulo and Pôrto Alegre. An extension to an existing gas pipeline between São Paulo and Campos is being built to connect it to Belo Horizonte.
New agricultural areas are also being developed and expanded in central Brazil with the objective of tripling the nation's grain production within the next several years. State of the art agricultural techniques are already being used in this region to boost crop yields, a practice that will only enhance the additional infrastructure coming on line.
Despite unfavorable press reports, Brazil's northeast has been and continues to be the recipient of enormous investment, according to Mr. Levy, particularly in the upgrading of its ports. Among the projects both planned and underway are:
Railways connecting Petrolina, Pernambuco on the San Francisco River to the ports of Forteleza and Recife Two hydroelectric dams along the San Francisco River Gas pipeline connecting Forteleza and Natal
A new water pipeline from the San Francisco River is gradually transforming the hitherto parched northeast into an irrigated California. The San Francisco River project will also include the construction of 11 new dams. This is spurring investment in electric generation, transmission and distribution. Additional tourism in the northeast is further buoying the region's economy. Neighboring Bahia is the recipient of large sums of private sector investment that allows the state a degree of independence. There, projects are underway to expand intermodal transportation.
The states of Minas Gerais and São Paulo stand to benefit from the widening of the major highway between Belo Horizonte and the city of São Paulo which is drawing a number of firms to locate plants along its route. This is transforming the area into a major industrial corridor. In addition, new automobile plants have been established in Minas Gerais. The state is also a major recipient of new agricultural investment.
In Rio de Janeiro a new port is being constructed along the Baia de Sepetiba. The new facility is expected to take much of the pressure off of the overburdened port at Santos and is further anticipated to avoid many of the cumbersome union rules that have inhibited productivity at other ports. The state of Rio de Janeiro is also benefiting from large, private sector investments, principally automobile assemblies.
The state of São Paulo is benefiting from private sector investment from is large numbers of base industries. Increasingly, new investment is taking place in less congested areas of the state. Indeed, central São Paulo now accounts for more than half of the state's GDP thus making the interior a focus of economic importance.
The agriculturally oriented economies of Paraná, Santa Catarina and Rio Grande do Sul are becoming ever more industrialized. Three new access routes are being established to connect the main north-south Mercosul route to the Tietê-Paraná and Paraná-Paraguay waterways. Rio Grande do Sul, in particular is changing. Gleaming automobile assemblies and petrochemical plants are sharing the landscape with traditional cropland.
Mr. Levy points out that the various investment projects are receiving considerable assistance from enlightened state and local governments. Unlike their predecessors the public sector is willing to work with private business in the best interest of development and many of the states involved see infrastructure investment as a means of becoming more competitive with the industrialized southeast. Collectively, Mr. Levy believes that these high levels of infrastructure and capital investments have the potential to double Brazil's GDP over the next five years through the end of 2003. It seems certain that this massive and diversified infrastructure investment will firmly underpin strong economic growth by spurring activity in other sectors of the economy, enhancing export competitiveness, increasing productivity and cutting costs of transportation and production. Moreover, the economies of the rest of South America are certain to benefit, too, particularly those countries that have strong economic ties to Brazil, namely Mercosul members, as well as Bolivia and Venezuela with whom Brazil has energy supply agreements. Brazil appears well poised to make a head start on the 21st Century.
 
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