1. BRAZIL COUNTRY ANALYSIS TEAM MEMBERS : AKANKSHA TIKKU ANUJ JINDAL AMANDEEP SINGH ABHIJIT SINGH ARPIT AGARWAL CHACKO JACOB

4. Agriculture is a major sector of the Brazilian economy, and is key for economic growth and foreign exchange. Agriculture accounts for about 5.8% of GDP (25% when including agribusiness) and 36% of Brazilian exports.

6. Major imports - machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics [Almost 15% of the exports & imports happen with the US ]

8. Relations between Brazil and India have grown considerably and co-operation between the two countries has been extended to such diverse areas as science and technology, pharmaceuticals and space. The two-way trade in 2007 nearly tripled to US$ 3.12 billion from US$ 1.2 billion in 2004. Global software giant, Wipro Technologies, also set up a business process outsourcing centre in Curitiba to provide shared services to AmBev, the largest brewery in Latin America. Brazil and India are deeply committed to IBSA initiatives and attach utmost importance to this trilateral cooperation between the three large, multi-ethnic, multi-racial and multi-religious developing countries, which are bound by the common principle of pluralism and democracy.

9. GDP [purchasing power parity] $1.993 trillion (2008 est.) (Country comparison to the world: 10) The then GDP of India was $ 3.297 trillion & was ranked 5 as per CIA fact book GDP [composition by sector] Agriculture: 6.7% [employs 20% of Workforce] Industry: 28% Services: 65.3% (2008 est.)

12. Financial market maturity

13. Stock markets

14. Corporate governance

15. Insurance sector maturity

16. Regulatory framework/Institutions

18. Land & Labor market efficiency

19. Macroeconomic stability

20. Currency regulation

24. Education

25. Healthcare

26. Administrative barriers to business

27. Corporate governance

28. Stock market

29. Competition Law

30. Currency regulation

31. Taxation

32. Insurance

33. Technology

35. Land – Some facts Land in divided into 5 major areas North including the Amazon basin Semi arid Northeast region Populated southeast region Smallest south region Landlocked center west region Amazon basin contains world’s largest river and the world’s largest tropical rain forest. Areas of highly fertile land are limited.

36. Land – Some facts The clearing of rain forests in the Amazon Basin has caused severe criticism from environmentalists. Agriculture accounts for 8% of the country's GDP, and employs about ¼ th of the labor force. World’s largest producer of sugarcane and coffee.

37. Land Reforms Land reform consist of a government-initiated or government-backed real estate property redistribution, generally of agricultural land. In the 1930s, Getúlio Vargas failed to fulfil on a promised land reform. Later reforms were planned in the govt of José Sarney but all in vain.

38. Land Reforms contd.. Various land reforms are State led land reform (SLLR), Land Credit National Program (PNCF), cedulada terra, bancoda terra, saojose Not really successful.

39. Real Estate Market Last 25 years were stagnant because of high interest rates, lack of financing, high inflation and slow economic growth. Since the 1994 economic recovery plan (Plano Real) and macroeconomic reforms and sound fiscal management , purchasing power has increased and in turn investments in real estate sector. Record number of tourism inflows has also improved the real estate sector.

40. Real Estate Market contd… Foreigners can purchase land and property in Brazil in their own names on a 100 percent freehold basis. Mortgage finance options still less in Brazil. Key property markets are Rio de Janeiro , Sao Paulo and north eastern Brazil.

41. Labor

42. Labor – Some facts As per Global Competitiveness Index, Brazil has been ranked at 80 in terms of labor market efficiency. Unemployment rate is 7.9 % in 2008 as per EuroMonitor. In 2007, 43 % of the labor was women. Child labour ; (5–14 years) 1999–2007 is 6 %.

43. Labor – Some facts Minimum wage – 465 Brazil Reals or 201 US $ per month. The Brazilian national minimum wage is adjusted annually. Millions of Brazilians live on the minimum salary Most business are conducted between the hours of 8am and 6pm and the average working business week is 42 hours.

44. Labor – Some facts Employees are entitled to a weekly rest of at least 24 hours. All employees are entitled to up to 30 days' holiday after a full year of work with the same employer. Service sector employed 66 % of the workforce in 2007. Population estimate for 2009 is 191 Millions and Labour force is 134.6 million (2009 estimâtes).

45. Median salary by Job Experience

46. Median Salary by Job

52. The Vargas government created a government-supervised trade union structure in 1931.

53. In 1950, pressure for a central labor organization.

54. CLO legalized in 1985.

55. During the 90’s, thousands of trade unions came up.

57. Education

58. Healthcare

59. Administrative barriers to business

60. Corporate governance

61. Stock market

62. Competition Law

63. Currency regulation

64. Taxation

65. Insurance

66. Technology

69. Literacy (Total Population): 88.6% GDP per capita(US $): 7605 Public expenditure per student as % of GDP per capita Primary school, 2004 12.8 Secondary school, 2004 11.5 Total public expenditure on education As % of GDP 4.0 As % of total government expenditure 10.9

70. EDUCATION PROGRAMS The Ministry of Education and Sports does not establish nationwide educational programs . For fundamental education, the Federal Educational Council determines which subjects shall be compulsory for the national common core, defining their objectives and scope. The Federal Council at each State and of the Federal District, lists the subjects contained in the diversified part of school curricula, for the area under its jurisdiction. For higher education courses, the Federal Educational Council determines the minimum curriculum for each course, but not the programs.

72. The minimum conditions for each school;

74. Education

75. Healthcare

76. Administrative barriers to business

77. Corporate governance

78. Stock market

79. Competition Law

80. Currency regulation

81. Taxation

82. Insurance

83. Technology

85. Brazilian Health System Government managed system, the SUS (Sistema Único de Saúde). Private sector, managed by health insurance funds and private entrepreneurs.

86. Health Indicators Sources: WHO Statistical Information System , 2006 World Health Report 2000

87. Health expenditures as a percentage of total government expenditures, 2006 Source: World Health Organization, available at http://www.who.int/en/.

88. Impact of Health on Earnings in Brazil Health status affects the wage-hour rate, productivity and labor supply Result of adverse health condition in Brazil Source: PNAD/1998

89. Challenges Aging population (9.7% of population over 60yrs by 2010). Public system underfinanced. Least fair financing of health system - people make high out-of-pocket payments for health care. Health services and human resources are disproportionately distributed, with overrepresentation in wealthy states (South and Southeast). Growing number of multinational companies with offices and employees in Brazil—fueling the demand for efficient and effective health-care programs.

91. Education

92. Healthcare

93. Administrative barriers to business

94. Corporate governance

95. Stock market

96. Competition Law

97. Currency regulation

98. Taxation

99. Insurance

100. Technology

103. Compare these stages with Brazil Economy

104. Overall Brazil Economy Ranking

105. Administrative barriers to business with the perspective of investors

107. Overall Brazil Ranking

109. Land acquisition is difficult

111. Decentralize the country’s labor system

112. Handle all company registrations at the State Commercial Registry Offices

114. Education

115. Healthcare

116. Administrative barriers to business

117. Corporate governance

118. Stock market

119. Competition Law

120. Currency regulation

121. Taxation

122. Insurance

123. Technology

125. Why Corporate Governance?

126. Regulatory Bodies

127. Goal-Instill the importance of disclosure within a company’s management, emphasize fairness amongst partners and illustrate the importance of accountability and corporate responsibility. Code of best practices Basic Principles Transparency Equity Accountability Corporate Responsibility Shareholder’s Rights Voting Rights IBGC- InstitutoBrasileiro de GovernancaCorporativa

128. CVM, Securities Market Regulator Comissão de ValoresMobiliários, CVM is the federal agency linked to the Ministry of Finance, instituted in December 1976.

129. Disclosures The financial and operating results of the company Company objectives Major share ownership and voting rights Members of the board and key executives, and their remuneration Material foreseeable risk factors Governance structures and policies Source: CVM

131. Education

132. Healthcare

133. Administrative barriers to business

134. Corporate governance

135. Stock market

136. Competition Law

137. Currency regulation

138. Taxation

139. Insurance

140. Technology

142. BM&F BOVESPA BM&F BOVESPA Securities, Commodities and Futures Exchange was created in 2008 with the integration between the Brazilian Mercantile & Futures Exchange (BM&F) and the São Paulo Stock Exchange (Bovespa). The leading exchange in Latin America in terms of market value. Self Listed exchange Source: www.bmfbovespa.com.br

144. Registration of publicly held companies and public offerings

145. Accreditation of independent auditors and mutual fund managers

146. Establishment of rules concerning the institution, the functioning, and the operational procedures of stock exchanges in Brazil

148. Source: www.bmfbovespa.com.br

149. Advantages of multiple listing segments Two way incentive Investor’s perspective Company’s perspective

150. Companies listed on Novo Mercado Inference:- Companies are accepting higher levels of corporate governance Source: www.bmfbovespa.com.br

151. Source: www.bmfbovespa.com.br

152. Major IPOs in 2008 Latest in the news ! IPO of VisaNet raises $4.3 billion in June 2009. Santander Brazil, a Brazilian bank, IPO raises $8 billion in the largest public offering in 2009 Source: www.bmfbovespa.com.br

153. Recommendation Although Brazil has been moving towards higher levels of corporate governance, mainly companies listed on Novo Mercado have been the major drivers for corporate governance reforms. So for the Brazilian government the challenge now is to move corporate governance reform beyond this limited group of companies and make it an integral part of the investment promotion agenda.

155. Education

156. Healthcare

157. Administrative barriers to business

158. Corporate governance

159. Stock market

160. Competition Law

161. Currency regulation

162. Taxation

163. Insurance

164. Technology

166. COMPETITION LAW As trade Liberalisation progresses and the state is gradually withdrawing from the expanded role it has assumed earlier. It is against this background of Liberalization Competition law assumes great importance Competition laws known more popularly as (Antitrust laws in the United States) are important for the preservation of economic freedom and our free-enterprise system.

167. What does Competition Law prohibit ? Competition law prohibits the deliberate exploitation of a dominant market position by a firm. Generally any agreement, arrangement or understanding between enterprises that has the effect of substantially lessening or limiting access to market is prohibited by Competition law. This prohibition applies not only to written agreements but also to oral and informal agreements.

169. to allocate customers or territories;

170. Not to deal with any person or persons ("group boycotts"), and, in certain circumstances,

171. to sell one product conditioned on an agreement by the buyer to purchase a second, distinct product ("tying").

172. Resale price maintenance

175. to control a relevant market of a certain product or service;

176. to increase profits on a discretionary basis;

177. to abuse one’s market control.

180. autonomy,

181. sound policy,

182. fair procedure;

183. an excellent leadership cadre;

185. Education

186. Healthcare

187. Administrative barriers to business

188. Corporate governance

189. Stock market

190. Competition Law

191. Currency regulation

192. Taxation

193. Insurance

194. Technology

196. FACTS Currency --- Real R$ 1 Brazil real = 0.58309 U.S. dollars The exchange rate as of October 16th, 2009 is approximately BRL 1.71 to USD 1.00. The modern real (plural reais) was introduced on July 1, 1994, as part of a broader plan to stabilize the Brazilian economy, known as the Plano Real. It replaced the short-lived cruzeiro real. Official reserve assets 221,628.70 Foreign currency reserves (in convertible foreign currencies) 211,366.28

199. The currency suffered a gradual depreciation until late 2002,as many Brazilians fearing another default or a resumption of heterodox economic policies purchased tangible assets as an inflation hedge or just simply took their money out of the country. At its worst point in October 2002, the Real actually reached its historic low of almost R$4 per US$1. Through orthodox macroeconomic policies (including inflation-targeting, primary fiscal surplus and floating exchange rate, as well as continued payments of the public debt) the real has been getting stronger and stronger against the dollar and, since the beginning of 2005, most other world currencies as well. In the year of 2007, in spite of the various attempts of the Brazilian Banco Central (Central Bank) to keep real low, it has grown stronger against the dollar. In May 2007, the real became worth more than 50 U.S. cents for the first time in recent years.

200. CURRENCY REGULATORY BODY The Central Bank of Brazil is the agency responsible for: (i) managing the day-today control over foreign capital flow in and out of Brazil (risk capital and loans under any form). setting forth the administrative rules and regulations for registering investments. (iii) monitoring foreign currency remittances. (iv) allowing repatriation of funds

202. Estimate of fiscal cost of banking restructuring in Brazil

204. FOREIGN INVESTMENT The investments into and repatriation of foreign capital from Brazil are subject to various federal laws and regulations. Foreign capital must be registered through an electronic system, which is part of the Central Bank Information System (Sistema de Informações do Banco Central– SISBACEN). All foreign investments must be registered with the Central Bank of Brazil. The foreign purchaser will be entitled to register capital in the same amount as the registration previously held by the selling company, once again regardless of the price paid for the investment abroad.

205. PATH-BREAKING EVENTS Biggest Trade partner of Brazil is China . Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

207. Education

208. Healthcare

209. Administrative barriers to business

210. Corporate governance

211. Stock market

212. Competition Law

213. Currency regulation

214. Taxation

215. Insurance

216. Technology

219. Tax and Taxing powers

222. Time, measure of hours per year necessary to prepare and file tax return

225. Pay more attention to stability in both the tax rules and regulations

226. Simplify the Tax system

228. Education

229. Healthcare

230. Administrative barriers to business

231. Corporate governance

232. Stock market

233. Competition Law

234. Currency regulation

235. Taxation

236. Insurance

237. Technology

239. Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss.

240. An insurer is a company selling the insurance; An insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. BUSINESS MODEL The business model can be reduced to a simple equation: Profit = earned premium + investment income - incurred loss - underwriting expenses.

241. BRAZIL’s INSURANCE INDUSTRY

245. Source of credit

246. Promotes foreign trade

247. Aid to small businesses

248. Provides business stability

252. Technical expertise

253. Product innovation

255. Education

256. Healthcare

257. Administrative barriers to business

258. Corporate governance

259. Stock market

260. Competition Law

261. Currency regulation

262. Taxation

263. Insurance

264. Technology

266. Technology – Some facts Brazil is the 5th Largest Computer Market in the World Brazil is Latin America’s largest telecom market. World’s leading producer of hydroelectric power. Brazil Leads Latin American Software Revenues. As per Global Competitiveness Index 2009, Brazil has been ranked at 46 in terms of Technological Readiness.

267. Technology – Some facts Develops projects ranging from submarines to aircrafts to space research. Possesses a satellite launching center and was the only country in the Southern Hemisphere to integrate the team responsible for the construction of the ISS. Pioneer in ethanol production. 73% of funding for basic research comes from government .

273. Technology – Some facts Uranium is enriched at the Resende Nuclear Fuel Factory to fuel the country's energy demands. Country's first nuclear submarine will soon be launched. The government also plans to build 17 more nuclear plants by the year 2020.

275. Education

276. Healthcare

277. Administrative barriers to business

278. Corporate governance

279. Stock market

280. Competition Law

281. Currency regulation

282. Taxation

283. Insurance

284. Technology

286. Governing Bodies INPI (Instituto Nacional Da Propriedade Industrial) The National Institute of Industrial Property Responsible for registration of trademarks, patenting, the registration of computer software, industrial designs and geographical indications, according to the Industrial Property Law. National Council for Combating Piracy and Intellectual Property Crimes. Principal international IPR organisations and agreements Brazil belongs to: Berne Convention (copyright) – since 1922 Paris Convention (priority rights) – since 1884 Patent Cooperation Treaty (patents) – since 1978 WTO/TRIPS (IPR in general) – since 1995

287. Patent applications and granted filed by patent office and country of origin Time and Cost Comparison Source: WIPO Statistics Database, June 2009

288. Utility patents per million inhabitants, 2008

289. Differences Follows “first to file” principle instead of “first to invent” (in US). Unlike US, the employee (not the employer) owns the copyright. Patents (20 years) vs. Utility models (15 years, less stringent criterion). Cause of Concern Brazil’s Law 10196 of 2001, which includes a requirement that National Health Surveillance Agency (ANVISA) approval be obtained prior to the issuance of a pharmaceutical patent. Not a member of Madrid Protocol (trademark). Backlog in the processing of applications of all types – 5 to 6 yrs. Major source of IP infringement- South and southeast IP is portrayed by the Brazilian government as a foreign monopoly against the interests of Brazilian people.

291. CONCLUSION & RECOMMENDATIONS Brazil as an investment destination for the short term is a “not favorable” option whereas if one is looking for long term attractiveness of Brazil as an investment destination, then the answer would be “yes”. The decision favoring Brazil as a better investment destination in the future is based on the assumption that the government would keep up with the present rate of reforms in each sector. To be fair, Brazil has the potential to become one of the most dynamic BRIC economies. The last two decades have been a period of important progress for the country in consolidating macroeconomic stability, liberalizing and opening the economy, and reducing income inequality, among other dimensions. This has put the economy on a sounder foundation in terms of sustainable, long-term growth.

293. an overly rigid labor market

294. poor educational standards coupled with an enduring inequitable income distribution.

295. Very high taxation levels It is a tough call for Brazil’s institutions to tackle these shortcomings in the present context of major external shocks on export demand and financing availability, along with falling commodity prices.

296. CONCLUSION & RECOMMENDATIONS The country would be in a better state if it were to work out to solve all these problems, especially the problems it faces in the “Basic requirements” we have identified. It is also important for the government to develop more tools to measure the impact of each public policy. Last but not least, the attention given to basic education should be enhanced, with an emphasis on universal access to secondary school and a strong investment in technical education and scientific careers. Brazil needs more engineers and more science teachers and researchers. Although improvements in healthcare provided to the overall population have been achieved in the past few years, providing increased access remains a key challenge in Brazilian healthcare.

297. References World Competitiveness Report’ 2009 –World Economic Forum EIU (Economist Intelligence Unit) database -Country Profile: Brazil. OECD database - Economic Survey of Brazil ‘2006. UNCTAD (United Nations Conference on Trade and Development) - World Investment Report 2008. World Bank database - Doing Business 2009 Euromonitor – Brazil ‘2006 The World Health Report 2000, WHO. Health Systems and Services Profile Brazil. PAHO and USAID. Intellectual Property Rights Primer for Brazil. [Hunter Rodwell Consulting, UK Trade and Investment]. Health status impacts on individual earnings in Brazil. [Luiz Fernando Alves and MônicaViegas Andrade. 2002]. World Intellectual Property Indicators 2009 - WIPO. www.doingbusiness.org OECD ‘Policy Brief’-competition policy & Law in Brazil –Sept’08 “Brail – Insurance market snapshot” – Ms. Maria Elena [FENASEG-Sept’08]

298. THANK YOU