Brazil’s National Economic and Social Development Bank (BNDES) made its first disbursement from a credit line for foreign investments by Brazilian companies. The credit line was instituted in 2002, but the first loan was made only last month.
According to the bank’s president, Guido Mantega, the program will help Brazilian companies compete abroad on equal terms with foreign corporations.
The first Brazilian firm to be benefitted by the internationalization support program was the Frigoboi meatpacking company, which received a loan from the BNDES of approximately US$ 30 million (70 million reais) to acquire majority control of the Argentinean Swift Armour company.
As a result, according to Mantega, Frigoboi gained access to a meat-processing technology that does not exist in Brazil and new markets, such as the US, and began to sell processed meat.
“In this phase of globalization, it is very important for Brazilian companies to compete for markets here and abroad on equal terms with other companies, especially in segments in which Brazil has demonstrated comparative advantages.
“This means that Brazilian firms must build muscles and compete abroad. It is not enough to be efficient locally,” Mantega affirmed during the Getúlio Vargas Foundation’s 2nd Economics Forum, which took place Tuesday, September 13, in the capital of São Paulo.
“The BNDES created a line of financial support for these operations, which must produce an increase in the trade surplus. They have to result in market liberalization and, therefore, a greater trade surplus,” Mantega says.
According to the president of the BNDES, the chief beneficiaries of the internationalization support program will be companies that export finished goods.
“There exists an international competition nowadays that implies quota obstacles and tariff barriers, and you are obliged to have Brazilian subsidiaries abroad, or else you don’t have entry to local markets.
“A flagrant example of this is in the steel sector, where everybody protects the market for finished goods. Brazil is thus limited to exporting iron ore and semi-finished items.”
Agência Brasil
