26 September 2008

Development Alternatives for Amazonas State, Brazil

Interview granted to the magazine Empório, regarding the challenges and alternatives of development for the State of Amazonas.


1 – What are the biggest challenges for the Free Zone of Manaus?

The Free Zone of Manaus is going through a very positive time of growth. However, we still have a long way to go to link the economic strength of the FZ with the rest of the economy of the state, principally with respect to the countryside. The Green Free Zone is a strong initiative under this direction, where we seek to increase the productivity of the countryside in some commodities such as oils, essences, foods, wood and other products, as rubber.

            The technological convergence also reveals itself to be a great challenge and opportunity. Each day it becomes more difficult to differentiate between the many electronic devices. Products that before were separate are now together; storage medias change; the legislation of the Free Zone needs to follow these changes, under the risk of becoming obsolete within the past technology.

Moreover, we face serious challenges concerning the workforce and infrastructure. Due to the sped up growth, we live in a time that I believe is similar to a “blackout” of the workforce. There are many initiatives, governmental (as UEA, CETAM) and private, but the average growth of the GDP of about 9% per year in the last five years has been more demanding than the available workforce supply.

 Our infrastructure has also improved but still leaves something to desire. In transportation we have the recent announcement of a new modern port in Manaus and the possibilities of geographic growth that the bridge to Iranduba brings. Our airport already demands augmentation, specifically to fulfill the increased demand for international flights and cargo. There is still a lack of a land connection between Manaus and Porto Velho, which can be taken care of by the BR-319 or, in a more productive manner and environmentally appropriate, by a railroad. In the field of energy, natural gas is our great strength, in the search for stability of resource and lower prices. In telecommunications, amplifying the reach of the cellular network with the third generation should be a priority in the next years, as well as the broadening in offers of internet providers, causing a reduction in the prices, which are amongst the highest in Brazil.

2 - The perpetual fiscal war with São Paulo in regard to the ICMS will be perpetual or can be solved between the two states?

The fiscal war will only be reduced with an ample reform in taxes. The current proposal of the Federal Government seeks exactly that. The commitments assumed by the President with Governor Eduardo Braga guarantee that the Free Zone will be preserved and that no other state will be able to grant similar fiscal incentives.


3 – Is the possible creation of Zones of Exportation Processing (ZEPs) in the northeast a threat to the Free Zone of Manaus?

The important factor is to guarantee that the ZEPs are designed in such a way not to compete directly with the FZ. For example, the limitation of sales in the domestic market is a good measure. It is necessary to equate the interests of a new national industrial policy with the implementation of a success model.

4 - For a company that intends to establish itself in the FZM, what are the advantages offered by the State Government?

The State Government not only has interest in new companies establishing themselves in Amazonas, but that the companies that are already here remain and prosper. We seek to offer equality of competition to the companies of the FZ and advantages that differentiate Amazonas from the other states. Also, we search for a good enterprise environment, in which the investor/entrepreneur is respected as a creator of jobs, actuator of growth, and payer of taxes. For this, the State Government has been searching to simplify the relationship with companies; we are still far from the ideal, but we are heading in this direction.


5 – You defend the creation of economic alternatives for the state. Is there any project elaborated in this direction?

We identified six sources of development for the Amazonas: The FZ, Natural Resources, Tourism, Energy, Services and Environmental Services. On the SEPLAM website we have a more detailed presentation. Basically, beyond the FZ that attributes for more than 50% of the state economy, we must take better advantage of:

·         Natural Resources: the Green Free Zone program seeks the development of our natural resources in a sustainable way. These resources include wood, rubber, products of agriculture or extraction, fishing (ornamental and for consumption), minerals, and water, amongst others.

·          Tourism: we have enormous potential. This is an activity that has been growing considerably, but still with a contribution of less than 2% of the state economy.

·         Energy: we have many opportunities arising out of the arrival of the gas-line of Urucu, improving the generation of energy and creating new companies. Moreover, biodiesel and cellulosic ethanol rise as great possibilities in improving the economy in the countryside, for consumption and possibly for exportation.

·         Services: we still need to search for improvements in many service areas. For example, we need cheaper and more abundant telecommunications (cellular and Internet mainly). We need more air routes and links, cargo and passenger, to better stimulate the competition and lower the prices. Also, we should seek for a greater availability of private health and education, due to the increasing demand. Moreover, there are possibilities of customer servicing through Call Centers, and we can stimulate the companies in the FZ to lease these services in Manaus, for example.

·         Environmental Services: with the Foundation for Sustainable Amazonas, we took a great step towards the establishment of a market of environmental services. We seek to show the value of the present forest by the services it naturally provides to Brazil and to the world. The first step is to remunerate the guardians of forest through the Bolsa Floresta. The next steps will be drawn by the State Government and the Foundation Council, which is composed of some of the most prominent entrepreneurs, leaders and thinkers of current Amazônia.




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