Bahia Basics facts

Predictability, good regulation and respect for contracts.

Bahia is a new growth engine
 Asia Leading the Global Recovery

“While the rich world puts its house in order, developing countries are becoming a
new engine of global growth and a pulling force for advanced economies.”
World Bank.
 China leadership role in the world economy
• Asia Leading the Way.

• The recent crisis has underlined the emergence of Asia as a global

economic powerhouse.

• China and India are leading the way, but the phenomenon is by no
means limited to these two countries. Asia’s economic importance is
unmistakable.

• Within five years Asia’s economy will be about 50 percent larger

than it is today, account for more than a third of global output, and
be comparable in size to the economies of the United States and
Europe.
• By 2030, Asian gross domestic product (GDP) will exceed that of
the Group of Seven major industrial economies (G-7).
BAHIA INFRASTRUCTURE PROJECTS
Bahia Challenges & Opportunities
Bahia Infrastructure sector offers profitable opportunities for trade partners. Many
projects are available and our mission is offers the opportunity to get involved.
Global Development 2010: Shifting Wealth
 Perspectives on Global Development 2010
The dynamics of the global economy over the last 20 years, and the
economic rise of China and Brazil, highlights the increasing interactions
between our countries through trade and foreign direct investment.

As of 2008, developing countries were holding USD 4.2 trillion in

foreign currency reserves, more than one and a half times the amount
held by rich countries.

These are just a few examples of a 20-year structural transformation of

the global economy in which the world’s economic centre of gravity has
moved from OECD members to emerging economies, a phenomenonal
“shifting wealth”.

Although the process has been ongoing for 20 years, the opportunities
for our countries are only starting to be understood.
 Potential gains from China-Brasil trade
• Global recovery has advanced: Activity in emerging
economies has been sustained by strong domestic demand
and the recovery of global trade.
• Major economies in Asia — China, India— remain in the
lead, followed by Brazil in Latin America.
• China’s rapid economic growth since 1978 has resulted in a
doubling of the country’s GDP every 7–8 years.
• Accompanying, and contributing to, this rapid growth has
been a significant expansion in China’s external trade. The
large economy has grown fast and has become increasingly
and quickly integrated with the world economy.
Brazil is a relevant market for any global player in infrastructure.

Brazil is one of the most attractive markets for infrastructure in the World today thanks
to favourable macroeconomics, a competitive infrastructure sector developing fast.

Macro-economics: 4% stable projected GDP growth, an increasing population (close to

200 millions people), being one of the main recipient of forign direct investment
worldwide and a rapidly increasing motorization rate, shape a bright future.

In Brazil northeast, the Bahia state is moving forward, with a lot of projects in railways,
roads and ports. There are local and international players and a stable legal framework
allowing an increasing number of projects being tendered.

The government Accelerated Growth prgram (PAC) is making progresses. With

investments of more than US$500 billons planned in the period 2011-14. Opportunities
for investment in infrastructure in Brazil exist mainly in roads, railways, aiports,
stadiums and energy. The fact that Brazil will host the two premier world sports events,
FIFA World Cup 2014 and Olympic Games 2016 is pushing all this infrastructure
development.
 This trade could be one of the main
engines of growth over the coming decade.
The OECD suggest that, were southern
countries to reduce their tariffs on southern
trade to the levels applied between
northern countries, they would secure a
welfare gain of USD 59 billion.

The direct channels of interaction between

China and Brazil – such as trade and foreign
direct investment (FDI) – have been
intensifying. Between 1990 and 2008 world
trade expanded almost four-fold, but South-
South trade multiplied more than ten times.
Developing countries now account for around
37% of global trade, with South-South flows
making up about half of that total.
 A win-win situation?
• Improvements in the range and quality of exports, greater
technological dynamism, better prospects for doing business, a larger
consumption base – all these factors can create substantial welfare
benefits for the whole world.

• That is not to deny the challenges. Environmental sustainability,

growing levels of inequality within countries and increased
competition are three significant issues raised by shifting wealth. The
birth pains of this new economic world order have also been
accompanied by enormous global imbalances. These challenges have
been building over the last two decades.

• Despite these challenges, the overall picture is a positive one for

development.
 Economic policies should be:
• Develop strategies to cacth the opportunities of
shifting world.
• promote foreign direct investment, learning the
lessons from successful clusters and using
investment links to achieve technological innovation
systems;
• Using sovereign wealth funds to promote growth
and investment in the economy;
• respond to the growing demand for agricultural
exports to improve agricultural productivity, through
greater support to R&D and extension services, and
technological transfer.
Doing Business
Chinese visitors are still a rare
sight on the streets of
Brazilian cities - but not for
much longer. And when they
come, they’ll know where to
get their cash: Brazil’s biggest
bank: Itaú signed yesterday a
cooperation agreement with
CHINA UNIONPAY (CUP).

By this contract, CUP clients

with their 2.2 billion credit
and debit cards will be able to
withdraw at over 30,000 Itaú
ATMs 24 hours a day.
The World Bank predicts
that Brazil will move from
being the tenth largest
economy in the world
today to the five biggest
economies by 2025

Brazil is one of the fast-

growing Bric economies –
Brazil, Russia, India and
China – that are reshaping
the international order.

The $67bn share offering

by Petrobras, the state oil
company, is the world’s
largest ever and just the
expression of Brazil’s
emerging financial clout.
International Trade Flows
 Brazil - Merchandise Exports by Region

In 2009 China became the leading trade partner of Brazil.

Strategic Logistic and Transport Plan
BAHIA INFRASTRUCTURE PROJECTS
Commodities lead the way
! "

#
$
%
& ''
( $) $
 Iron Ore Reserves: the importance of China to Bahia

Trade could be one of the main engines

of growth over the coming decade.
Bahia East-west Railroad
Bahia Port to Central Brazil

Extension: 975 km

Total Value: R$ 4,8 billions

Term: 2011

China is the largest developing country

outward investor with an investment
stock estimated at more than USD 1
trillion.

FDI in Bahia has also increased.

Intermodal Transport System
Railway, Port and Airport
SISTEMA PONTE SALVADOR-ITAPARICA / BR-116 / BR-101 / BR-242
 Intermodal Transport System
Port - Airport - Railway - Roads
 Incentives for direct investment (FDI)
•Market and supplier access are the main factors affecting
investments entry. Also the access to customers and
suppliers of inputs are key determinants of FDI inflows.

•Our Governments spend large sums of money to entice

foreign direct investment (FDI), offering generous tax
incentives. We believe that foreign firms will generate
positive externalities on domestic firms.

•The State fiscal Programs: Desenvolve and Probahia

support with tax isention the atraction of foreign direct
investment (FDI).
 World Cup 2014
The Brazilian Strategy

* %

The sense of urgency created by the advent of the World Cup in 2014 and the Olympics
in 2016 can be very positive for Brazil as this stirs the public and private sectors to
carry out badly needed infrastructure investments.
 Projeto Fonte Nova

The sense of urgency created by the World Cup in 2014 and the
Olympics in 2016 can be very positive for Brazil as this stirs the public
and private sectors to carry out badly needed infrastructure investments.
 World Cup 2014 Stadium
• The project is under progress as Private Public
Partnership (PPP) to build and operate a new World Cup
2014 stadium.
• The stadium will feature seating for 50,000.
• Transportation, energy, sanitation, and other
infrastructures of the project will be developed to meet
international standards.
• Hosting of the World Football Cup in 2014 and the
Olympic games in 2016 will stimulate much response,
the construction of roads, airports, and stadiums.
 Logistic Multimodal Transport Plataform
Infrastructure sector offers profitable opportunities for trade partners. Many projects are
available and our mission is offers the opportunity to discover how to get involved.
 Juazeiro Logistic Plataform
• Juazeiro has a privileged geographical location in the center
of brazilian northeast, and the radial connection around
Juazeiro in addition to its network, facilitate the transport of
merchandise and favors the intermodal infrastructure.

• Nearby Petrolina has a good intermodal infrastructure and

facilities that connect with those of Juazeiro. Together, the
two interact synergistically to create a logistic platform.

• Platforma Logística do São Francisco is a PPPI project to

convert Juazeiro into the largest logistic platform in the
Brazilian Northeast.
 Why Invest in Bahia?

The choice of industrial leaders:

• Ford Motors Automotive Complex: U$ 1,9 Billion

investment. Production capacity for 250.000 vehicles / year.

• Paper and Pulp Industry: Investments of more than U$1,5

billion over the last 5 years

• Oil and Gas Industry: New oil discoveries raising Brazilian

reserves from 14th place to 4th place in the world.
 Oil Industry Investments
•Brazil has 12 billion barrels of proven oil reserves, the
second-largest in South America after Venezuela.

•Petrobras has the world’s largest capital expenditure

programme, worth $220 billion over the next five years.

•The discoveries of oil made by Petrobrás have made it ease to

forget that Brazil is already the world´s largest exporter of
coffe, sugar, chickens, beef and orange juice. It also exports
vast amount of soya and iron ore, as well as other ores and
metals.
This presentation summarizes Bahia'
s economic prospects.

The state'
s future looks bright; but it will require lots of hard work and
leadership to bring the less fortunate people out of poverty.

Governo do Estado da Bahia

Secretaria de Planejamento
Romeu Temporal
Economic Adviser
 How has China Handled the Global Crisis?

• China was hit hard by the global financial crisis. However,

the authorities policy response mitigate the impact on the
economy and ensured that China has led the global
recovery.

• Public infrastructure spending was quickly increased, taxes

were lowered, the government put in place incentives to
boost purchases of consumer durables, and pensions, social
transfers, healthcare and education spending were all raised.

• China’s recovery had positive spillovers to the region and

the global economy, initially through increased demand for
commodities—contributing to an upswing in global
commodity prices—and later through higher imports of
capital goods.
The Great Trade Collapse To what extent has trade recovered
from the recent global recession?

•Have the speed and extent of the

recovery differed among economies,
particularly between those that
suffered a banking crisis and those
that did not?

•Has the recovery varied across

different product groups?

•How has trade behaved in the wake

of previous banking and debt crises?

•What factors are associated with

sharp declines in trade following a
crisis?

•What are the implications for the

recovery of trade from the recent
crisis?
The Recovery in Trade

Has Trade Recovered?

 Trade gravity model
• The gravity model is widely used to
explain the level of bilateral trade flows on
the basis of individual characteristics of
each partner (size and level of economic
development) as well as the
characteristics of the country pair
(distance between them and whether they
share a common border, language, or
currency).
•Chinese inflation has been modest.

Supply factors, including those

captured through upstream foreign
commodity prices, have been
important drivers to curb inflation.

Domestic demand and monetary

conditions seem less important,
reflecting a large domestic output gap
generated by many years of high
investment.