Despite Lack of Skilled Workforce and Infrastructure Rio Gets Ready for Olympic-Size Growth

Port Zone With production of pre-salt oil in ultra-deep waters, the Soccer World Cup in 2014 and the 2016 Olympics, Rio de Janeiro is greatly optimistic regarding investment and economic growth perspectives. The state, and especially the capital, hopes to gain more and more importance as a business hub.

“Rio de Janeiro has two main questions in the shape of oil and the international agenda (Cup and Olympic Games),” said the Economic Development, Energy, Industry and Service secretary of the state, Julio Cesar Carmo Bueno.

In this context, he believes that the capital of Rio de Janeiro has all it needs to become a mixture of Houston, Texas, and Barcelona, Spain. The former, as it is the center of the oil industry in the United States, and the latter as it is becoming an important international tourist destination, mainly after hosting the 1992 Olympics.

The Development Secretariat estimates that investment in the state should total 240 billion Brazilian reais (US$ 156 billion) up to 2020, considering confirmed projects and projects under development.

The Federation of Industries of the State of Rio de Janeiro (Firjan) forecasts the investment of 181.4 billion reais (US$ 118 billion) from 2011 to 2013, according to study Decisão Rio. The total is 43% greater than estimated in the previous study, for the 2010 to 2012 period.

According to the New Business and Infrastructure manager at Firjan, Cristiano Prado, of the total forecasted by 2013, 139.9 billion reais (US$ 91 billion) should be applied by the Public Power, being 60% by state-owned oil company Petrobras, and 41.5 billion reais (US$ 27 billion) by private initiative.

“The sectors of the transformation industry to attract the greatest investment are shipbuilding, petrochemical and ironworks,” said Prado. In the oil sector, according to secretary Bueno, investment of funds “should grow significantly”.

According to the secretariat’s research, exploration and production of oil should receive the main share of forecasted investment, followed by the logistics, urban infrastructure, ironworks, energy, petrochemical, shipbuilding, transformation, service and telecommunications sectors.

Among the projects are Petrobras’ Rio de Janeiro Petrochemical Complex (Comperj), to receive a total of 14.6 billion reais (US$ 9.5 billion), port enterprises, the construction of nuclear power plant Angra 3, the re-urbanization of the capital’s port structure, urban infrastructure works and the redoing of Maracanã stadium.

In the wake of these activities, other sectors should develop. “Rio offers great opportunities for private investment,” said the Business and Finance Strategy professor at Getúlio Vargas Foundation (FGV), Ricardo Teixeira. “They are outstanding opportunities,” he added, enthusiastically.

He pointed out the service sector, especially in the areas of telecommunications and finance. To Teixeira, the capital city of Rio de Janeiro has a natural talent for services and companies that had left the city are now returning.

In his evaluation, this is greatly due to the improvement in urban safety, mainly after the establishment of the Police Pacification Unit (UPPs) in communities previously dominated by drug dealers. With less violence, Rio, according to the professor, offers better quality of live than other great centers, like São Paulo.

Greater peace is also favourable to tourism, a traditional sector for Rio, to be expanded further with the Cup and Olympics. “With the lower violence, the improvement of infrastructure and services, part of the investment in tourism would take place even without the Cup and Olympics,” pointed out Teixeira. According to Bueno, 17 new hotel projects are in progress in the city of Rio de Janeiro.

“The sector should grow further due to the legacy that these sports events may leave, which is the consolidation of Rio de Janeiro as a global tourism destination,” said Prado, from Firjan. As an example, he mentioned Barcelona, which started receiving twice as many visitors after the 1992 Games, reaching the figure of 3.5 million tourists a year.

Bueno mentioned investment in other areas, like the Hyundai Heavy Industries project to build a heavy equipment factory in the state, with investment of US$ 150 million, the Rolls Royce intention of opening a unit for energy turbine production for oil platforms, an enterprise to receive investment of US$ 60 million, and the construction of a Nestlé plant in the city of Três Rios.

According to him, of the 240-billion-real investment forecasted by the secretariat by 2020, 33% should come from private sources and 14% from abroad. Among other companies that announced projects in the state are GE, Michelin, the North American Baker Hughes (oil and gas), ironworks Usiminas and others.

“The state and the city have been main destinations for national and international investment, establishing themselves as important structured business hubs, ready to receive investment,” said Prado. Every day we meet businessmen interested in investing in Rio de Janeiro,” he added.

Among the bottlenecks faced by the state are the shortage of labor and the deficient infrastructure in some areas. Prado recognized that companies in different sectors are having a hard time hiring personnel “in the necessary quantity and quality”, but guaranteed that the regional nucleus of the National Service of Industrial Education (Senai) is working on offering broad scale professional training.

With regard to infrastructure, Bueno said that port and energy investment is “attuned” to the growth of the state, but that it is still necessary to solve the question of airport capacity and promote expansion of highway and railway grids. These are problems that, to a greater or lesser extent, face the whole of Brazil.

To Teixeira, labor and infrastructure should be supplied according to demand. “Rio has taken a long time to grow, and is now growing fast. It is natural,” he said. Bueno also pointed out that the state is the one that receives the greatest volume of foreigners coming to work in Brazil.

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