Brazil will be ready in time

Eric Farnsworth – The Miami Herald, 8/13/2015

Paraphrasing Ronald Reagan, there they go again. As Brazil readies to host the 2016 Olympic Summer Games one year from now, international observers have begun the countdown clocks and a familiar litany of complaints that are aired out before virtually every major worldwide sporting event.

Venues that will not be ready to host events. Infrastructure that can never be completed on time if at all. Community redevelopment projects that will remain on the drawing board. Security concerns and police over reaction. Cost overruns, debt accumulation, and corruption. Environmental clean-up and pollution control measures that are failing, endangering the health of athletes and spectators alike.

Hosting the Olympic Summer Games is not for the faint-hearted. It is a massive, risky, hugely expensive undertaking with increasingly questioned benefits. For approximately two weeks, cities and the nations they represent draw the eyes of the world, bringing the attention and anticipated revenue they might otherwise not have other opportunities to attract.

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Brazil’s latest growth agenda banks on slicing Amazon with railroad tracks

Kenneth Rapoza – Forbes, 6/9/2015

Brazil’s latest infrastructure led growth agenda includes a R$40 billion ($13.1 billion) railroad that slices right through the Amazon rain forest. And it largely depends on China.

Now that China is interested in the now-called Trans-Pacific Railroad, Brazil decided to put it on its list of infrastructure concessions announced on Wednesday. The railroad is an old idea that’s been around since 2011. Back then, only Peru was in on the project. Now China has interest and, most likely, money to spend. But considering that this cuts through some of the rainforest, even guys at the Asian Infrastructure Investment Bank will face serious opposition from non-governmental organizations in the area. In fact, this train is probably a train to nowhere even if the AIIB or the China Development Bank invested in the project.

The thing is, the railroad accounts for a sizable 20% of the new wish list of Brazilian infrastructure. Brazil’s government said today that it expects investments in railroads to sum to R$86.4 billion, almost half of it coming from the revamped railroad project announced earlier this month with China and Peru.

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A year later, Brazil’s FIFA World Cup infrastructure still not built

Kenneth Rapoza – Forbes, 06/07/2015

The FIFA World Cup. It promises developing nations status, stadiums with wi-fi and cup holders, roads, bridges and new airport terminals. And let’s not forget, sponsorship parties! But I digress…

Last year’s FIFA World Cup left Brazilians crying in disbelief as their national team took looked like the Muppets on the field with the Germans. The consolation prize at least was all this new development that was promised when FIFA awarded the country with the soccer championship back in October 2007. Shiny trains. More efficient airports. Less traffic in Sao Paulo. FIFA might be worth it after all.

But an investigative report Sunday by Folha de Sao Paulonewspaper shows that R$11 billion ($3.5 billion) worth of 35 projects budgeted  in 2010 are not complete and a handful of simply been abandoned. A year after the World Cup, Brazil’s FIFA projects for public transportation and airport terminal extensions at places like Guarulhos International (GRU) in Sao Paulo and Afonso Pena International (CWB) in Curitiba are incomplete.

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The Betrayal of Brazil

Michael Smith, Sabrina Valle, Blake Schmidt – BloombergBusiness, 05/08/2015

In mid-2013, Brazilian federal police investigator Erika Mialik Marena noticed something strange.

Alberto Youssef, suspected of running an illicit black-market bank for the rich, had paid 250,000 reais (about $125,000 at the time) for a Land Rover. The black Evoque SUV ended up as a gift for Paulo Roberto Costa, formerly a division manager at Brazil’s national oil company, Petrobras. “We were investigating a money-laundering case, and Petrobras wasn’t our target at all,” says Marena. “Paulo was just another client of his. So we started to ask, ‘Why is he getting an expensive car from a money launderer? Who is that guy?’”

Marena had spent the previous decade building cases against money launderers, and Youssef had been a perennial target. He’d been arrested at least nine times for using private jets, armored cars, clandestine pickups by bagmen, and a web of front companies to move illicit cash. But Youssef had been spared serious jail time by testifying repeatedly against other doleiros, Brazilian slang for specialists in laundering unreported cash.

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World Cup stadiums leave a troubled legacy in Brazil

Associated Press, 5/2/2015

Brazil spent billions of dollars renovating and building World Cup stadiums that were supposed to help modernize and improve local soccer. Almost a year after the tournament ended, the nation is still trying to figure out what to do with them.

Some of the 12 new state-of-the-art stadiums are just now being completed as originally planned. Others are already up for sale.

The Itaquerao Stadium in São Paulo hosted the World Cup’s opening match last June, a 3-1 win over Croatia for the host nation. But the stadium has only now been completed, nearly 11 months after the tournament. Some of the glass that is part of the stadium’s roofing was installed several weeks ago, along with other items that were still missing at the arena, which cost $450 million.

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Experts give their prescriptions for Brazil as the commodity boom ends

Joe Leahy – Financial Times, 3/25/2015

Brazil’s economy has slowed sharply. The brakes were applied by the end of the commodity supercycle that occurred in the first decade of the 21st century combined with rapid credit growth.

The debate in Brazil has returned to the vexed question of how to make one of the world’s most inward-looking economies more competitive.

The answer lies in improving education, streamlining taxation, simplifying bureaucracy in general, and fixing infrastructure. But beneath these concepts are complex questions that run as deep as Brazilian politics and culture itself.

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Schumpeter: Brazil’s business Belindia

The Economist (print edition), 2/28/2015

BRAZILIANS make up almost 3% of the planet’s population and produce about 3% of its output. Yet of the firms in Fortune magazine’s 2014 “Global 500” ranking of the biggest companies by revenue only seven, or 1.4%, were from Brazil, down from eight in 2013. And on Forbes’s list of the 2,000 most highly valued firms worldwide just 25, or 1.3%, were Brazilian. The country’s biggest corporate “star”, Petrobras, is mired in scandals, its debt downgraded to junk status. In 1974 Edmar Bacha, an economist, described its economy as “Belindia”, a Belgium-sized island of prosperity in a sea of India-like poverty. Since then Brazil has done far better than India in alleviating poverty, but in business terms it still has a Belindia problem: a handful of world-class enterprises in a sea of poorly run ones.

Brazilian businesses face a litany of obstacles: bureaucracy, complex tax rules, shoddy infrastructure and a shortage of skilled workers—to say nothing of a stagnant economy (see article). But a big reason for Brazilian firms’ underperformance is less well rehearsed: poor management. Since 2004 John van Reenen of the London School of Economics and his colleagues have surveyed 11,300 midsized firms in 34 countries, grading them on a five-point scale based on how well they monitor their operations, set targets and reward performance. Brazilian firms’ average score, at 2.7, is similar to that of China’s and a bit above that of India’s. But Brazil ranks below Chile (2.8) and Mexico (2.9); America leads the pack with 3.3. The best Brazilian firms score as well as the best American ones, but its long tail of badly run ones is fatter.

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