BNDES reportedly considering calling off Foxconn's funding

Wednesday, September 28, 2011

In the most recent twist involving Taiwanese electronics producer Foxconn Technology's planned factory in Brazil, national development bank BNDES may now call off federal funding destined for the operation, local media reported.

According to Exame magazine, which cited a source close to the negotiations, BNDES executives said the bank is no longer eager to finance part of the U$12bn budgeted by Foxconn to open the local iPad factory. BNDES reportedly fears the Taiwanese might make no investments at all.

Earlier this week, Brazilian daily O Estado de S Paulo cited science and technology minister Aloizio Mercadante as saying that Foxconn is still looking for a Brazilian partner to share the investments. According to Mercadante, the problem is that there are no local investors with the "financial brawn" needed.

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Local production of the iPad was originally expected to begin in July. Later, the science and technology minister said Foxconn would launch production at its facility in the city of Jundiaí, in São Paulo state, by the end of the year. This prediction now seems unlikely.

Last week Brazil's senate approved a bill that exempts locally produced tablets from the PIS and Cofins welfare taxes.