Brazil must invest US$400bn to solve its infra problems

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Tuesday, August 28, 2018

Brazil needs to invest at least 1.7tn reais (US$408bn) in its transportation sector to deal with its infrastructure problems.

According to a study by national transports confederation CNT, most of the investments should go to railways (744bn reais) and highways (568bn reais).

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"We believe that the success of planning in our industry involves permanent review of projects and prioritization of investments, the basis of a development-oriented transport policy," said CNT president Clésio Andrade.

The study elaborated 2,663 projects across the nation, which are considered essential for the development of transportation infrastructure, also including airports, ports and waterways.

Historically, investments in transport infrastructure in Brazil are low, representing between 2001 and 2017 less than 0.5% of GDP. Although the government began boosting infrastructure investments in 2007, it is declining since 2012 due to the weak economy.

"It is essential for the government to seek efficient ways of using public resources to maximize the benefits for the transport sector and, consequently, for all the society. In addition, the government should promote actions to attract the private sector to infrastructure," CNT said.

MORE COSTS FOR COMPANIES

The lack of investments pushes up costs for companies.

Logistics costs increased to around 12.4% of companies' gross revenues in 2017, up from 11.7% in 2015, according to a recent study by think tank Fundação Dom Cabral. This increase translates into 15.5bn reais additional expenses for local companies, which already pay higher logistics costs than companies elsewhere.

"We started this study four years ago and so far we never detected a decline in costs from one year to another. Unfortunately, we have not seen the government investing in infrastructure so the trend is that we will have the continued deterioration of our infrastructure networks, mainly our roads, and this is likely to generate more costs for companies," study author Paulo Resende (pictured) told BNamericas.

The complete study, in Portuguese, is available here.