The government of Brazil is keen to attract greater investment from the UAE and other GCC countries to boost the huge potential offered by it’s economy and it’s rapidly growing population.
Brazil is currently seeking investments of up to USD 500 billion for projects in various sectors in the Brazilian economy. Sidney Alves Costa, Middle East director of ApexBrasil, of the Brazilian Trade and Investment Promotion Agency, speculates that the total worth of foreign direct investment (FDI) from the GCC nations into Brazil is estimated to be USD 4-5 billion. However, as some funds originate from London, while others originate from New York, it is difficult to conclusively estimate the value of investments.
In 2012, Abu Dhabi’s state investment fund Mubadala announced the purchase of USD 2 billion stake in Brazil’s EBX group. The investment gave Mubadala a 5.63 percent preferred equity interest in the Centennial Asset Brazilian Equity Fund. Mubadala also hoped that the investment would help in the development of new strategic opportunities in Brazil and Latin America. This was hailed as one of the biggest deals at the time, in Brazil and was expected to stir further interest among Gulf investors.
While Brazil may not be enjoying the fastest growth rates in the region, its economic fundamentals remain strong and present a strong case for investment. The country is set to lure GCC and UAE investors in specific sectors, which include energy, semi-conductors, logistics and infrastructure. Brazil has clear rules for the investment and business communities and are obeyed by all institutions.
However, the country has a very complex tax system and needs to bring more clarity into it for foreign investors. Brazil also does not have double taxation agreements to protect investors. Further, Gulf investors may at first be wary of investing in the country because of its distance, but investors should take the opportunity now, to become fully informed about the size of Brazil’s economy and its market.