1. Capturing the momentum
Ernst & Young's 2012 attractiveness survey
Brazil

2. FDI in Brazil reached record levels in 2011
Number of FDI projects Jobs created FDI by value (US$ billion)
161,166 62,9
507
124.125 127.406
47,0
366 44,5 44,0
289 88.430
268
165 48.901 19,0
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Source: fDI intelligence Source: fDI intelligence Source: fDI intelligence
► 27% increase in jobs ► 43% increase in FDI value.
► Continuous rise in FDI
generated through FDI Average value of a project
projects since 2007. ►
projects. in Brazil is US$124m –
► 39% increase in the number
► Around 75% of the FDI higher than in China
of FDI projects since 2010.
jobs were directed toward (US$71m) and India
industrial activity. (US$63m).
Page 2 Brazil attractiveness survey 2012

3. US, UK and Japan are leading investors - China
emerging
► The US and Japan are the leading investors in Brazil, with the US
Developed taking the lead in terms of projects.
world
investors ► The US had a share of 29.4% in FDI projects during 2011, Japan
had 7.1%.
► The UK is the largest European investor in Brazil with projects
European doubling from 20 in 2010 to 45 in 2011.
investors ► The UK originated the highest number of jobs from Europe and
second largest globally in 2011.
► China is emerging as a strong investor in Brazil.
Emerging
world ► Fifth-largest in terms of FDI value (a six fold increase since
2010);
investors
► Fifth in terms of number of jobs created.
.
Page 3 Brazil attractiveness survey 2012

4. Where is Spain ?
Page 4 Brazil attractiveness survey 2012

5. Investors come to Brazil for services and
manufacturing
Source: fDI intelligence
Page 5 Brazil attractiveness survey 2012

6. Positionning Brazil in FDI competition ?
Page 6 Brazil attractiveness survey 2012

7. Southeast is the primary geographic focus
FDI projects by destination city (2011)
Barcarena 1
► The Southeast region attracted 901
Belem1
North
projects between 2007 and 2011.
11 12 Northeast ► Creating more than 250,000 jobs.
21 23
► Accounting for more than 55% of FDI
Macae 2
projects.
Midwest ► The projects were mainly directed
9 11 toward ICT, manufacturing, business
Southeast +
201 278
services and retail sectors.
Rio de Janeiro 7 ► The South region has attracted 115
2010 2011
South + Sao Paulo 16 projects between 2007 and 2011
30 39
Number of UK FDI projects Curitiba 2 ► Creating more than 48,000 jobs.
+ Well-developed infrastructure Santa Cruz 1 ► Northeast shows promise for the future
- Infrastructure bottlenecks
Source: fDI intelligence
Page 7 Brazil attractiveness survey 2012

8. Emerging tier-two cities
Next coming ? Florianopolis South / Suape Northeast / Brasilia Midwest ?
Page 8 Brazil attractiveness survey 2012

9. Brazil – inside the mind of investors

10. Methodology
Page 10 Brazil attractiveness survey 2012

11. Brazil: Latin America’s leader ?
Page 11 Brazil attractiveness survey 2012

12. Brazil is the Latin American leader
► 78.4% of investors see Brazil as the most attractive country for investment in
Latin America. Why?
► Robust economic foundations
► Burgeoning middle class
► Rising domestic consumption for goods and services
► Wide base of industrial and natural resources
► Higher awareness among investors with relation to other Latin American
countries
► More mentions than any other country
► Competition from the emerging and developed countries
► Respondents (49%) believe that China is Brazil’s largest competitor, followed
by India (14%) and the US (10%)
Page 12 Brazil attractiveness survey 2012

13. Brazil’s domestic market is the primary attraction
What factors make Brazil an attractive investment destination?
Strengths
► 86.5% cited Brazil’s domestic market.
► 76% cited quality of life, culture, social environment and language.
► 72.8% cited telecommunications infrastructure.
► 71.9% cited entrepreneurial culture.
► Brazil has recently been ranked as the third-best country among the G20 at providing young
entrepreneurs with a favorable environment for business.
Opportunities
► Labor skills: The country still lags behind the G20 average in terms of university education and
R&D.
► Environment and operational costs: A low-quality and high-cost transportation system still
remains a weak factor for investors (only 43.4% mentioned it as an attraction) because it
leads to operational inefficiencies.
► High labor costs compared with other RGMs such as Russia, China and Mexico, along with
rigid and inflexible labor regulations, continue to raise concerns for foreign companies.
Page 13 Brazil attractiveness survey 2012

14. Brazilian cities: the undisputed leadership of …
Page 14 Brazil attractiveness survey 2012

15. Next coming ?
Page 15 Brazil attractiveness survey 2012

16. Routes for the future
Page 16 Brazil attractiveness survey 2012

17. Boosting growth, especially with 2014 World Cup
and 2016 Olympics
Over the next three years, do you think the Which three of the following business
attractiveness of Brazil as a place for your company to sectors do you perceive as driving Brazil’s
establish or develop activities will …? growth in the next 2 years?
Oil & gas
Real estate and construction
Tourism
Agriculture and food industry
Transports industry and automotive
Consumer goods
Mining
Information and communication
technologies, IT
Logistics and distribution channels
B to B services excluding finance (IT
service, consulting, audit,
communication, etc.)
► Pre-salt discoveries are expected to drive growth in
Bank/Finance/Insurance
the oil and gas sector, BUT the 2014 FIFA World
Clean techs
Cup and the 2016 Olympic Games will boost the The pharmaceutical industry and
biotechnologies
real estate and construction, and tourism sectors.
Utilities
Source: Ernst & Young 2012 Brazil attractiveness survey. Heavy industry
Total respondents: 250
None
Page 17 Brazil attractiveness survey 2012 Can't say

18. Brazil is strongly positioned but investment is
needed
How do you see Brazil in 2020?
Strong positioning
► Respondents believe that Brazil will take leading
positions in:
► Energy – on account of pre-salt discoveries.
► Infrastructure and tourism – as sporting events spur
growth.
► Manufacturing – as Government initiatives to boost
competiveness take effect.
Diversification required
► Investors are concerned about Brazil’s:
► Value added services – only 5.2%
► Shared service centers – only 5.1%
► Education and higher learning – only 3.3%
Source: Ernst & Young 2012 Brazil attractiveness survey.
Total respondents: 250
Page 18 Brazil attractiveness survey 2012

19. Doing Business in Rio
Rio de Janeiro – Gateway to Brazil
Page 19 Brazil attractiveness survey 2012

20. Brazil has made steady and consistent progress in the last
50 years to become a country that no major company can
afford not to be in
►Solid democracy
►Diversified capital-intensive industry
►Open economy status
► Solid macroeconomics (low inflation, low debt, high reserves, moderate GDP
growth, floating exchange rate, fiscal responsibility)
►Robust banking system
►Open to private investment
►More inclusive society
►Significant infrastructure investment program in place
Page 20 Brazil attractiveness survey 2012

21. …still, investing in Brazil requires investors to be familiar
with the economic, legal and tax environments in order to
succeed
►Complex tax system
►Transport and logistic infrastructure still requires major improvement
►Shortage of labor force required for complex and high end industries
►Red tape often creates delays for expansion / new investments
►Public services under perform if compared to levels at OCDE countries
Page 21 Brazil attractiveness survey 2012

22. Rio de Janeiro presents an opportunity for investors to enter
/ expand in Brazilian market avoiding many of the nation’s
lingering pitfalls
►Tax breaks for major investments
►Top transport and logistics hub
►Leading education and R&D
►Agencies (such as Rio Negócios) supporting businesses to succeed
►Best-in-class, professional mind-set public services
Page 22 Brazil attractiveness survey 2012

23. Rio de Janeiro has a strategic plan, to be a leading city in
selected sectors
►Global oil & gas hub, leveraging proximity with pre-salt basins and being the
HQ of Brazil NOC (Petrobras), major IOC, OFS and Brazil’s O&G sector
regulators)
► Latin America centre of the creative industry
►Mega-events hub (Olympics, World Cup) for the decade
►Brazil’s telecom centre
►Major Brazil centre in pharmaceutical, health care and technology & innovation
Page 23 Brazil attractiveness survey 2012

24. Nevertheless, going to Brazil and Rio, companies should
know that “Brazil is not for Amateurs”
► Integrated logistics and tax planning can make a huge difference on
business cases Return On investment figures
► Consider higher costs and bureaucracy to have expatriates legally working
► Consider existence of some exchange controls
► Be aware of what countries have tax treaties with Brazil and those that do
not
►Some industries have specific tax regulations that , if used well, could
create tax relief – good tax planning advice is critical
Page 24 Brazil attractiveness survey 2012

25. What next ?
Ernst & Young Terco
► Alexandre Rangel - Exec Director
► Olympic Games Quality Review & Management Leader
+55 21 9575 9896