Expert calls on govt to employ trade deals, financing to jumpstart IT production

Thursday, March 24, 2011

Brazil's federal government could focus on generating favorable import-export tax conditions and boosting financing to effectively drive local IT production, ICT consultancy Gartner vice president Donald Feinberg told BNamericas.

This week, the country's government announced plans to spur production of IT products such as tablets, PCs and modems, according to a communications ministry press release.

Communications minister Paulo Bernardo was quoted as saying by Bloomberg news service that new legislation will allow manufacturers to produce tablets locally without paying federal PIS and Cofins taxes.

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According to government figures, roughly 50% of all IT equipment purchased annually in Brazil is produced in China.

To accelerate local production, Brazil also needs to overhaul its international import and export tax agreements, Feinberg said.

"If you want to bring electronics into Brazil, it's 100% duty," he said. Government officials "have to negotiate some trade agreements that bring down the amount of duty that's charged for imports and exports... so that products from here can move for a competitive price to another region."

Strengthening the role of financial institutions such as Brazilian development bank BNDES will also give local production a shot in the arm, the analyst said.

"The government has to make it easier for companies to get funding, like Positivo Informática," he said. "If they are going to double their output, they need funds to do that."

The communications ministry's telecommunications head, Nelson Fujimoto, said in the statement that officials are also pushing for tax reductions to increase ICT access.

"We have sent a bill [Medida Provisória no 507] to congress that eliminates taxes for modems," he said. "After receiving approval, the measure will make those products cheaper, and will probably translate to greater access to that equipment."

The minister also underscored government plans to extend broadband to 1,163 cities nationwide through the country's national broadband plan (PNBL).