Brasil flag Brasil: Invertir al Brasil

Inversió estrangera directa (IED) al Brasil

FDI in Figures

Foreign direct investment into Brazil boomed between 2009-2011 but had been slowing down ever since. However, according to the World Investment Report 2023 published by UNCTAD, FDI inflows increased to USD 86 billion in 2022, compared to USD 50.6 one year earlier (+69.9%), the second-highest value ever recorded and the fifth worldwide, due to a doubling of reinvested earnings. Moreover, Brazil attracts 41% of direct investment in Latin America in 2022. In the same year, the total stock of FDI stood at USD 815.6 billion, around 42.4% of the country’s GDP. According to the latest figures available from the Brazilian Central Bank, the main investing countries in Brazil are the Netherlands, the United States, France, Spain, and Canada. Investments are mainly oriented towards commerce, non-metallic mineral products, chemical products, financial and auxiliary services, and motor vehicles. In the first eight months of 2023, FDI inflows totalled USD 37.9 billion, down by 36% compared to the same period one year earlier (data Central Bank).

The country is an attractive destination for international investors due to several factors: a domestic market of over 210 million inhabitants, availability of easily exploitable raw materials, a diversified economy that is less vulnerable to international crises, and a strategic geographic position that allows easy access to other South American countries. However, investment in Brazil remains risky because of some negative factors including cumbersome and complex taxation, bureaucratic delays and heavy and rigid labour legislation. As part of the country’s ongoing effort to strengthen its business environment, Brazil introduced electronic certificates of origin which reduced the time required for import documentary compliance, facilitating and simplifying the whole process. The country also made several infrastructure concessions which have helped foster investment. The current president has plans for further improving the business environment in the country, implementing reforms such as decreasing the number of days needed to create a company in Brazil from 79.5 days down to the regional average of 30 days. Easing of regulation in some sectors and potential amendments to the tax system should help as well. To date, Brazil does not have a national security-based foreign investment screening process. The country ranks 49th among the 132 economies on the Global Innovation Index 2023 and 127th out of 184 on the 2023 Index of Economic Freedom.

 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 28,31850,65186,050
FDI Stock (million USD) 595,285729,577815,627
Number of Greenfield Investments* 223187242
Value of Greenfield Investments (million USD) 16,67523,05117,888

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Brazil Latin America & Caribbean United States Germany
Index of Transaction Transparency* 5.0 4.1 7.0 5.0
Index of Manager’s Responsibility** 8.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 4.0 6.7 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Brazil

Strong Points

Advantages for FDI in Brazil:

  • Extensive natural resources
  • A large middle-class and a large domestic market (7th largest population in the world)
  • A strategic geographic location
  • A diversified economy, well anchored in international exchanges (FDI inflows and foreign exchanges reserves are important, low external debt)
  • Export sectors, especially in industry, represent investment opportunities, thanks to the weakness of the real exchange rate
Weak Points

Despite being open to international trade, some of the barriers to FDI in Brazil include :

  • Onerous labour laws, resulting in high costs to foreign companies and keeping a good part of local business in the informal sector
  • High costs of production (wages, credit, energy and logistics)
  • Insufficiently developed infrastructure
  • High level of regulatory risk (high taxation and heavy fiscal system)
  • High exposure to changes in commodity prices on international markets
  • Shortage of qualified labour
Government Measures to Motivate or Restrict FDI
The Brazilian Government encourages and promotes FDI. The National Investment Bank (BNDES), one of the largest development banks in the world, encourages foreign investment. Most of the barriers to foreign investors have been removed, particularly on the stock market. A very large number of public companies have been privatised and many sectors were deregulated over the last fifteen years.

Among the Brazilian initiatives to attract investors there are numerous incentives: Inovar-Auto Programa, that aims at improving technological development and energy efficiency; Consulta Pública Ex-Tarifário, which enables increased innovation by companies through  a temporary reduction in the rate of tax on the import of capital goods; Renai, which provides information to potential investors on business opportunities in Brazil. Moreover, Brazil’s federal government offers investment support through funding and agreements limiting double taxation.

The Brazilian Trade and Investment Promotion Agency (Apex-Brasil) is the national investment promotion agency for Brazil. Apex-Brasil webpage offers information about the Brazilian tax system, industrial property protection, labor and environmental legislation, credit support and incentives for foreign investors.
Bilateral investment conventions signed by Brazil
Brazil has signed several bilateral agreements for the protection of foreign investments. To see the list of countries and conventions, click here.

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Actualitzacions: April 2024

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