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A former economic power, Rio de Janeiro, after years of poor performance is once again regaining its luster. And big companies are not afraid to invest there anymore.

Carlos Emmanuel da Fonseca Barreto

After being the capital of Brazil and the brightest pearl on Brazil's economic necklace in the past century, Rio de Janeiro has experienced a consistent, economical, political and cultural decline in the twentieth century. It all started in 1900 with the inauguration of the Port of Santos in São Paulo. The ensuing industrialization of that state would inexorably shift Brazil's economic center away from Rio. Then, in the 60's it came the move of the capital to Brasília. Recently Rio had been frequenting more the police pages of the press than the cultural ones.

Nowadays the trend to move away from Rio is again changing. The Port of Sepetiba is bringing back to the former capital the economic eminence that the state had occupied in the past. This port is just one of many improvements that the new government of Marcelo Alencar is committed to, in order to attract private investment to the State.

The Port of Sepetiba is an infra-structure project considered to serve as the main doorway to the Mercosul, a common market grouping Brazil, Argentina, Uruguay and Paraguay. There are many advantages in Sepetiba compared to any other port in the Southern Cone. The draft of 18.5 meters (60.7 feet) allows vessels with 150,000 tons to anchor. Santos, the largest Latin American port, has a draft of 14 meters (46 feet) and is already at its capacity.

Furthermore, Sepetiba has the capacity to expand and its strategic location, half- way between São Paulo and Minas Gerais (the states with the two largest GNPs in the country) allows for easy accessibility. To facilitate operations, the Brazilian constitution was changed to also permit foreign flag vessels to ship between any Brazilian port.

"Sepetiba will be the largest port in the Southern Cone," says Eliezer Baptista, vice-president of Companhia Vale do Rio Doce, a Brazilian mining giant.

Another important addition to Rio is its international airport, commonly known as "Galeão." The state government is investing $25 million to expand its cargo terminal. "We are very optimistic about the cargo flow into Rio," says Flávio Fetter, marketing manager of Lufthansa. "Until recently, the cargo was stored in tents. Now, we will have more space to generate more business," he added. Moreover, the state plans to reform and expand six other smaller airports in strategic locations. After availability, access is a considerable factor to foster new investment and economic growth.

In addition to the privatization of the RFFSA (federal railroad system), the state plans a $500 million investment in the transportation infra-structure alone. They plan to duplicate existing highways and build new ones, including a major link connecting Sepetiba to Xerém, resulting in a major intersection of highways connecting Rio to every other state. Mr. Alencar's government also plans to privatize the main state companies including Banerj (state commercial bank), CTC (public transportation system), Conerj (navigation company), Codert (company of road development and bus terminals), Ceasa (system of food supply and distribution), Ciferal (manufacturer of bus and truck bodies), Serve (aviation company), CEG (natural gas distribution company), Cerj (electricity distribution company), Celf (electricity generation company) and Coperj (petrochemical company).

Rio de Janeiro is by far the richest state in the country if accounted for its oil reserves. However, oil it is not a source of state revenue. According to the constitution, oil exports out of Rio are balanced by its imports of electricity. Local government claims that this unfair trade creates a $140 million loss in revenues per month. Vice-governor, Luiz Paulo Corrêa da Rocha, guarantees that "we are working to change this chapter very soon." The state is also rich in natural gas, accounting for 35% of the country's total reserves. Besides oil and gas, the government is resuming construction in the Angra II Nuclear Power Plant as yet another source of energy to attract newcomers.

In response to Brazil's increasing problem with telecommunications, Embratel (federal telecommunications company) is building a fiber-optic system connecting Rio to São Paulo to Belo Horizonte to Fortaleza. Furthermore, a joint venture between Rio's City Hall, Embratel, Telerj (state telephone company) and private enterprises is putting forth a construction of 36 buildings equipped with the most advanced telecommunication system, called the Teleporto. The project will cost $1 billion in an eight-year period. The Teleporto is the first of its kind in Latin America in its attempt to become a world-wide center of software production and business. It will provide Rio with another advantage for companies looking for communications and technological opportunities within the Mercosul.

In a recent visit to Rio, Volkswagen's vice-president José Ignacio Lopez Arriortúa announced that it would locate its new factory of trucks and buses in Resende. It represents an investment of $250 million. "The new Volkswagen factory signifies in the long run, a 5% increase in the state's GNP," says Ronaldo Cezar Coelho, Secretary of Industry, Commerce and Tourism. By the end of 1996, the Firjan (Rio de Janeiro Industry Federation) has confirmed investments in the state totaling US$8 billion which will create 195,864 new jobs, and further, by 1999 another $10 billion of investments are expected to arrive. It is not by chance that the city of Rio de Janeiro with its own stock market, is home to Brazil's investment banks such as Banco Icatu, Banco Garantia, Banco Pactual, and Banco Bozano-Simonsen. Investment in Rio has always been big business.

Another considerable investment is being made in education. Rio already has the highest rate of skilled labor in the country. The state ranks second, after São Paulo, in the number of research and universities countrywide. The state has four large federal universities, three state universities, plus several other private institutions, including Rio's acclaimed Fundação Getúlio Vargas and PUC (Pontifícia Universidade Católica).

According to the IBGE (Brazilian Institute of Geography and Statistics), located in the city of Rio, 34% of Rio's population has at least nine years of education in comparison to 30% in São Paulo. The state also is home to Brazil's second largest consumer market: a population of 13 million people with per capita income of $4,300 in comparison to the national rate of $3,100. For these consumers, the city of Rio has just opened two new shopping centers, and has plans to build five more as well as additions to its Barra Shopping, Latin America's already largest shopping center.

Leisure and entertainment are important features of Cariocas' (from Rio city) daily lives. As the birth place of bossa nova, samba and lambada, the city is the world capital of Carnaval and it has a place on the Guinness Book of Records for holding the liveliest New Year's Eve party on the globe. The environment is well suited for entertainment conglomerates such as Rede Manchete and Rede Globo, the fourth largest TV network in the world. The latter is investing $180 million in a state-of-the-art television studio in the city of Rio. An amusement park, "Parque Temático," a $250 million investment using characters from Brazilian folklore, is also planned.

After appearing for over five years on the American publication Consul Information Sheet which alerts tourists to unsafe travel destinations, Rio de Janeiro was finally taken off the black list. "A good image of Rio is the responsibility of every Brazilian," says Rio's mayor César Maia. He believes that "the trade mark of Brazil is Rio." When one thinks of Brazil, the image that comes to mind is the statue of Christ the Redeemer, the Sugarloaf, and the white sands of Ipanema and Copacabana beaches, glorified in many songs.

Brazilians can not afford to have its trade mark degenerated. Everything that happens in Rio has national and international repercussion for Brazil. The slaughters of Vigário Geral shanty town and Candelária church brought world attention and made more people aware that it was necessary to support a massive change in Rio. With so much happening, Rio hopes to bring back the 60's glamour and once again become one of the most desirable world destinations. The city's New Years Eve party has been generating a lot of enthusiasm. A huge party on the beaches of Rio, directed by Italian opera and movie director Franco Zefirelli, will celebrate the beginning of a new era. Rio de Janeiro hopes to prove that it still deserves the title of Cidade Maravilhosa.

Doing business in Rio

Company: Petrobrás		Company: Piraquê 
Location: Campos 		Location: Rio de Janeiro
Product: petroleum		Product: food industry
Investment: $1.9 billion 	Investment: $11 million

Company: Ciferal 		Company: Itacan Refrig.
Location: Duque de Caxias 	Location: Rio de Janeiro
Product: body of bus		Product: refrigerators
Investment: $16.8 million	Investments: $12 million

Company: Pepsi			Company: Real Metalco
Location: Queimados		Location: Rio de Janeiro
Product: beverage		Product: metallurgy
Investment: $86 million		Investment: $14.1 million

Company: CSN			Company: Brahma/Miller
Location: Volta Redonda		Location: Rio de Janeiro
Product: steel			Product: beverage
Investment: $1.1 bil.		Investment: $550 million

Company: Getec Química		Company: Glaxo
Location: São Gonçalo		Location: Rio de Janeiro
Product: chemical		Product: pharmaceutical
Investment: $13.8 mil.		Investment: $120 million

Company: Fleischmann Royal	Company: Carioca de Catalis.
Location: Petrópolis		Location: Rio de Janeiro
Product: food industry		Product: catalytic converter
Investment: $16 million		Investment: $12 million

Company: Almax			Company: Prosint
Location: Rio de Janeiro	Location: Rio de Janeiro
Product: technology		Product: technology
Investment: $38 million		Investment: $24 million

Company: Latasa			Company: Volkswagen
Location: Rio de Janeiro	Location: Resende
Product: metal can		Product: truck and bus
Investment: $77 million		Investment: $250 million

Company: TV Globo		Company: Unipar/Petrobrás
Location: Rio de Janeiro	Location: Duque de Caxias
Product: TV/motion picture 	Product: petrochemical
Investment: $180 million	Investment: $800 million

Comp: Antarctica/Budweiser	Company: Kaiser/Coca-Cola
Location: Rio de Janeiro	Location: Queimados
Product: beverage		Product: beverage 
Investment: $90 million		Investment: $25 million

Company: Zenith/Dreams		Company: Parque Temático da Barra
Location: Rio de Janeiro	Location: Rio de Janeiro
Product: television		Product: amusement park
Investment: $60 million		Investment: $250 million

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