With recent elections set to shake up the business environment, foreign investment in Brazil is expected to grow dramatically. While Brazil is a world-known economic power, many do not know the specific sectors that contribute to its economy. Brazils size and diversity has created a raft of attractive business sectors. Now that the new government who is very ‘pro-business‘ has taken control, national sectors are now more attainable than ever before for foreign investors.
Brazil is a huge country (the largest in Latin America and the fifth largest globally) and presents both locals and foreigners with many different market opportunities. Additionally, Brazil is the largest Latin America economy and is key Latin America commercial jurisdiction, sharing a border with various countries, making it an ideal trading hub. For those looking to enter the Brazilian market, there are several different types of companies/legal entities that can be established to conduct operations. However, the type of company must be chosen according to the needs of the business.
Every year, economists, business experts and consultant companies give their opinion relating to the Brazilian markets and economy, and share ideas and dreams regarding potential business opportunities. Some of their forecasts become reality, others not. However, what is agreed upon is the potential that the region holds.
Keep reading to learn about 4 attractive Brazilian sectors open for investment.
Brazils large land mass means that there are ample business opportunities for companies involved with alternative energy, with Brazil having one of the highest potentials in hydric energy creation. However, Brazil has lacked productivity due to outdated equipment resulting from low investment levels in addition to complicated bureaucracy for many years. This has meant that the energy sectors, including alternative energy, have fallen behind other nations in the region. Another downfall of the sector is that fees and taxes have traditionally been high, killing the drive for investors and entrepreneurs to enter the sector.
In recent times, Brazillian companies and individuals have been seeking alternative sources of energy, and international experts are now looking towards Brazil as a great place to bring the market what it desires. Nowadays, solar energy is picking up in popularity. Projects sized above 5 megawatts are taking advantage of a mix of bilateral PPAs and spot prices. Therefore, together with market-driven demand for renewable energy sources, investors and suppliers see this sector as a key growth area for Brazil. In fact, according to Brazil’s Energy Research office, renewable energy sources – including wind, solar and biomass, are expected to reach almost 61 gigawatts in capacity by 2027.
Mobile Phone Application Development.
Once upon a time, smartphones were just for fun. These times are over. Today, smartphones provide a tremendous platform to test and trial new ideas, programs and applications. As the middle class in Brazil grows, and the expansion of smartphone user increases daily, the market becomes larger. The 235,500,000 mobile phones registered in Brazil shed light on the opportunities for experts and companies involved in mobile phone application development. The opportunities are feasible in sectors like real estate, fintech, ride-sharing, amongst others.
As Brazil grows as a business destination, with cities such as São Paulo and Brazilia experiencing an increase in foreign companies setting up businesses, it becomes clear that co-working spaces are a profitable investment option. In the big cities such as the above mentioned, finding a suitable office involves high startup costs for professional individuals, small business and start-ups. Offices in good neighborhoods that have internet access, meeting rooms, and modern furniture are often expensive. Additionally, it can be difficult to secure commercial contracts with your preferred terms and conditions.
Local and foreign companies are already investing in this kind of business, with co-working spaces becoming a popular and alternative method to long term office rental contracts.
Brazil is the second biggest food producer in the world. Approximately, 60 percent of the country’s territory is used to farm, of which 77 percent is exported. Even with the uncertainties in the Brazilian economy, agriculture has managed to achieve positive figures and growth. Promoted by the Brazilian Association of Farming Marketing and Agribusiness (ABMRA), 34.14 percent of farmers intended to purchase new machinery in 2018.
For manufacturers of agricultural machinery, or companies looking for a new supplier of agriculture products, Brazil remains an attractive destination.
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In addition to these 4 major sectors with expected economic growth, there are other sectors evolving too. For instance, the Brazilian textile sector is slowly emerging as a strong investment opportunity. Also, Brazil doesn’t have great seasonal changes and it can produce and supply cotton all year round.
It is common to meet keen investors that are interested in looking towards Latin America, and particularly Brazil, as regions full of enticing investment opportunities. While many companies may be willing to invest in Brazil, they are aware of the obstacles and commercial challenges that present themselves when expanding into the region. Foreign business culture and complex local tax systems are just some of the challenges that can be faced when entering the Brazilian market. For instance, all companies need to adhere to Brazilian accounting and taxation requirements which have are mandatory by law since 2012, when Brazil implemented international accounting standards.
The good news is that foreign investors can avoid complications and can managing business risks by working with a local partner. Biz Latin Hub is the trusted partner of companies looking to expand their business operations to Brazil and Latin America. If you want personalized support, reach out to a member of our team today via [email protected].