Brasil is willing to overcome the legal instability to motivate new investments in infrastructure

Brasil is willing to overcome the legal instability to motivate new investments in infrastructure

The projects of the sector have a greater term of maturity of investment, of at least 20 years, demanding a permanent legislation, regardless of the change of government

In the past three years the investments in infrastructure in Brazil did not reach 2% of the Gross Domestic Product (GDP), and the minimum necessary for the country to advance in the segment would be of 4% of the GDP of the sector on an annually basis. In order to improve the investment rate of the sector, the federal government, by late October, held thirty auctions in the sector of infrastructure, with the expectation of having BRL 11.6 billion in investments and BRL 5.93 billion in concessions and bonuses.
“In spite of the efforts of the Ministry of Infrastructure, which has been promoting an active and consistent work to develop projects and works, the government, with difficulties of investment, found the solution in the private sector”, asserted Afonso Mamede, President of the Brazilian Association of Technology for Construction and Mining (Sobratema), during the launch of M&T Expo 2021 – the International Fair of Construction and Mining Equipment.
According to Mamede, in order for the private sector to invest there is a fundamental issue: legal certainty. “We are working the legislation to offer more protection to the investor, because the infrastructure demands long term investments, of at least 20, 25, or 30 year, different when compared to other areas, whose return of investment may occur in five years, for instance”.
In this regard, Emir Cadar Filho, President of the Brazilian Association of Unions and Class Entities of Infrastructure (Brasinfra), emphasized the rule cannot be changed when electing a new government. “That implies renegotiations that may impact the cost of the work. Therefore, it is necessary to make adjustments to provide legal certainty, after all Brazil needs infrastructure”, asserted.
Fernando Ciotti, Network and Wholesale officer of Caixa Econômica Federal, mentioned the example of the basic sanitation area, whose regulatory framework is at the Chamber of Deputies and the forecast is that it will be voted in November. “There are points in the sanitation model that require a definition before any initiative, such as the regulatory framework that aims at assuring to the investor the tariff modality, capacity of investment, etc. Therefore, this legislative movement offers security to the investor, so that it may act in the market”, says the executive. Currently in Brazil the coverage of water services is of 83.3%, while 51.9% of the population count on sanitation service.
Another example mentioned by Ciotti was the electrical sector, which, in spite of the provisional remedy of 2013, which changed the system of tariff collection of the segment, is the first of infrastructure in terms of investments. “This is valid both to hydroelectric and thermoelectric plants and the transmitters, because there is a regulatory environment and, above all, the sector is aligned with the regulatory agency, whose role is that of supporting the area to define the cluster size, the investment”.
To Leandro José Diniz, Officer of the Department of Loans and Financing of Banco Bradesco, the legislation will evolve because there is not another way for Brazil to follow. “The legal definition affects the cost and, in the case of long term projects, such as infrastructure, that may complicate the payback in the future”, said Diniz. According to the executive, with the start of the regrowth of investments, one of the operations with increased growth in the market was that of financing, because additional guarantees are being currently required, in addition to a greater capital expenditure of the investor. Diniz also explained the relevance of the work of sectorial entities before the Federal Government to formalize the processes in law, in order to provide protection to the domestic and external investor.
During the debate promoted in the launch of M&T Expo 2021, another discussed topic was that of financing in infrastructure, since the Brazilian economic reality is different, with interest rates of 5%, inflation of 3% and negative effective interest. “This is a challenging scenario. The last historical moment in which we had negative effective interest in Brazil was in the 70’s, period when 6% of the GDP was invested in infrastructure”, recalled Diniz.
According to the officer of Banco Bradesco, the market has always adjusted to the economic conditions. “Even now, there is funding for infrastructure. In a quick analysis, in the last years, the market of capital, via debentures, fulfilled everything BNDES missed in the past years and there is still a gigantic will”, exemplified Diniz.
In the evaluation of the officer of Caixa Econômica Federal, the market is currently seeking papers and projects that may provide values in general, not only in financial terms, but also in terms of social and environmental liability, for instance. “Thus, there is an opportunity, with the reduced Selic rate, for a market of investors buying different papers, long term papers, with increased capacity of return. And this is something that must be useful, because the capital of banks will not necessary provide all investments in the sector. Thus, the secondary market becomes relevant”.
Finally, Sobratema’s President asserted on the existence of a change to the form of investing, with the financial area offering new products, acting with diversification, and investors are seeking alternatives for their money. “Our focus is laid on this migration and we really expect that the financial market will consolidate to face this new reality, as well as to offer a greater celerity for the approval of frameworks and regulations necessary, which will offer guarantees and legal certainty to our sector”.
M&T Expo 2021 will be hosted on July 5-8th, 2021, at the São Paulo Expo. This will be the second edition of the trade show organized by the recently founded Messe München do Brasil, in conjunction with its institution partner, the Brazilian Association of Technology for Construction and Mining (Sobratema). Since 2017, M&T Expo became part of the bauma NETWORK, the largest international network of events for the industry of construction and mining equipment, being considered as the most important trade show of the industry in Latin America.

 

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Messe München
A Messe München é uma das empresas líderes mundiais de feiras de negócios, com mais de 50 feiras técnicas de bens de capital e de consumo e de novas tecnologias. A cada ano, mais de 50.000 expositores e cerca de três milhões de visitantes participam em mais de 200 eventos realizados no centro de feiras e exposições em Munique (Alemanha), no ICM – Internationales Congress Center München e no MOC Veranstaltungscenter München (Centro de Congressos de Munique) assim como no exterior. Juntamente com suas subsidiárias, a Messe München organiza feiras em países como China, Índia, Brasil, Rússia, Turquia, África do Sul, Nigéria, Vietnã e Irã. A Messe München tem uma presença global com afiliadas na Europa, Ásia, África e América do Sul e mais de 70 representações estrangeiras trabalhando em mais 100 países.

Sobratema
A Sobratema – Associação Brasileira de Tecnologia para Construção e Mineração se dedica a propor soluções para o desenvolvimento tecnológico do setor, difundir conhecimentos e informações e participar da formação, especialização e atualização de profissionais que atuam no mercado brasileiro da construção e mineração. Com mais de 30 anos de atividade, conta com mais de 650 associados (profissionais e empresas de construção, de locação, fabricantes e prestadores de serviços) e de parcerias estratégicas, com as principais entidades e empresas do setor da construção e da mineração no Brasil e Exterior. A entidade possui a Inteligência de Mercado, dedicada a estudos e pesquisas para subsidiar a tomada de decisões estratégicas das empresas, o Instituto Opus de Capacitação Profissional e a Sobratema Publicações para edição de livros e revistas técnicas. Além disso, organiza eventos especializados: a BW Expo e Summit – Biosphere World, Workshop Revista M&T, Fórum de Infraestrutura Grandes Construções, Tendências no Mercado da Construção e as Missões Empresariais, que levam profissionais para as mais importantes feiras internacionais dos setores da construção e da mineração.

 

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