Rio Grande do Sul is currently a major focused region for Lombard Global, Inc. within Brazil, a major focused country for us. 

Article by: William Billeaud, President of Lombard Global, Inc. with help from Renan Vicentini, Director of Business Development-Brazil for Lombard Global and the following partners and analyst team members of Guapo Capital Group: Fernando Spadari, Maurício Bergamaschi, Fabio Vitola and Maurício Bouchut.

 

Rio Grande do Sul, southernmost estado (state) of Brazil, is bordered by the state of Santa Catarina to the north, Argentina to the west, Uruguay to the south and the Atlantic Ocean to the east.  The state’s main inhabitants include descendants of the Portuguese, Germans and Italians.  There are also descendants of Polish and other European immigrants.  Famous citizens include supermodel Gisele Bundchen and current Brazilian President, Dilma Rousseff as well as six other former Brazilian Presidents.   Key investment data considerations include:

GDP (2010): US$ 129.7 billion (4th in Brazil) – represents 7.3% of Brazilian economy

GDP per capita (2010): US$ 11,823.9 (5th in Brazil) – higher than the country’s average

Unemployment rate (2011): 4.5%.  Two percentage points below the national average

Population (2010): 10,695,532 inhabitants. 5th most populous state in Brazil

Life expectancy at birth (2008): 75 years

HDI: 0.832: 4th highest in Brazil and 29th in the world if Rio Grande do Sul was a country.

Principal Cities

Porto Alegre: capital of Rio Grande do Sul.  Its metro area is the 4th largest metropolitan region in Brazil and is receiving US$ 411.7 million from federal government as one of the World Cup 2014 host cities.

Caxias do Sul:  2nd city in terms of population and importance, including the location of the most diversified industrial park in the state.

Rio Grande: It has one of the biggest and most important maritime complexes of the country. It produces the majority of the platform modules used by Petrobras in the exploration of Oil and Gas.

Economic Structure (by Gross Value Added) (2009):

Agriculture and livestock: 10%

Industry: 25%

Services: 65%

Technology Centers

14 technology centers now exist in Rio Grande do Sul, representing approximately 170 companies including Microsoft, Dell and HP. 

A Center for Semiconductors

The Ceitec, an important technology center has been established for the development of semiconductors in Rio Grande do Sul.

  • It is a “federal public company” associated with the Brazilian Ministry of Science and Technology, which was created in 2008. $285 million dollars have already been spent on the establishment of a strong technology base and to develop this segment in Brazil.
  • The Ceitec’s main feature is the creation of a Center for Research and Development (R&D), which is responsible for the creation of the products and intellectual property generation for chip production in Brazil.

Broadband

  • The current administration of Rio Grande do Sul is preparing a plan to deliver faster broadband connection. The total investment is US$ 55.7 million…
  • The government’s goal is the implementation of 1 thousand km of optical fiber from 1 to 10 Gbps speeds in the first phase, which can be expanded up to 40 Gbps.

Rank within Brazilian Industry  

-1st center for agricultural equipment

-1st in transport equipment production

-1st in leather and footwear production

-2nd center for beverage production

-2nd center for chemical products

-2nd center for furniture

-2nd center for machines and equipment

-2nd center for metal products 

-2nd center for rubber and plastics

-3rd largest industrial park of Brazil

-4th center for food manufacturing

-4th center for vehicle production 

 

Tax Incentive Policies 

In order to attract investments, the State has a special incentive program incentive based on the Tax on the Circulation of Goods and Rendering of Services (ICMS)

  • In Brazil, ICMS is equivalent to the English VAT.
  • Brazilian states use the ICMS as a tool to attract investment.
  • In Rio Grande do Sul, a state mechanism to provide ICMS deductions is called Fundopem.
  • The State offers financing of up to 75% of the due ICMS. Such a discount should be paid after the granted grace period.

Incentive to attract investment to regions with development index below the state average 

  • The benefit is extended if the company chooses regions which present development index below the state average.
  • The State offers deductions of up to 75% of the monthly incremental ICMS. The deduction does not need to be returned after the granted grace period.
  • This program is called Integrar-RS.

Selected foreign companies with operations in Rio Grande do Sul 

-GM

-John Deere

-AB InBev

-Adidas

-Doux Frangosul

-Bosch

-Pirelli

-Thyssen Krupp

-Yara

-Alstom

-Pepsi

-Coca Cola 

 

We hope this has piqued your interest in the state of Rio Grande Do Sul.  For more information, contact William Billeaud in the USA at +1 214-675-5539 and wbilleaud@lombardglobal.com or Renan Vicentini in Porto Alegre, Brazil at +55 11 395 84 886 and renan.vicentini@lombardglobal.com.