Brazil's federal government has launched a new production development policy (PDP) to stimulate investment and growth in technology and basic industries, the presidential office said in a press release.
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The plan, which was officially announced by President Luiz Inácio Lula da Silva on May 12, has a budget of 210bn reais (US$125bn), which will be administrated by the federal development bank BNDES.
The PDP will support 24 sectors, ranging from agriculture to motor vehicles to oil, although other industries could be added later.
One of the sectors is the capital goods segment, responsible for the manufacture of equipment for transport infrastructure, sanitation and basic industries, among others. This production chain has been losing competitiveness over the last 10 years, which can be seen in the slowdown of imports and exports in the first quarter of 2008.
According to national infrastructure and basic industries association Abdib the government has included a considerable number of suggestions made by the entity on behalf of the capital goods sector.
These include measures to create a portfolio of infrastructure projects, to expedite auctions and bidding, actions to stimulate the capital market and funding, accelerated depreciation for equipment, loan facilities for the purchase of capital goods, anti-dumping policies and proposals to reduce the cost of logistics.
"The challenge will be to establish a management model and a centralized control to monitor the implementation and compliance of the goals. There is no time to lose," Abdib president Paulo Godoy told BNamericas.
SPECIFIC PDP GOALS
One of the key aims of the policy is to position and maintain Brazilian companies among the top five players in their areas, especially in the mining, steel, aviation and biofuels sectors.
Meanwhile, the government also wants to improve competitiveness in high-tech industries. At the same time, it will seek to promote industries that serve the wider Brazilian population, such as construction firms and providers of internet services, according to the release.
The government aim is to increase fixed investment to 21% of GDP by 2010 from the current level of 17.6%. It also wants to increase private investment in research and development to 0.65% of GDP.
The new policy seeks to raise Brazil's share of global exports to 1.25% by end-2010 from the current level of 1.18%. It expects to increase the percentage of small to medium-sized export companies to 10% of the total number of exporters.
The government will stimulate these areas with four instruments, according to the release.
It will offer incentives, credit, venture capital and tax breaks. Where appropriate, state agencies will use the government's greater bargaining power to cut costs.
It will also look at easing regulations for key industries to stimulate production and competitiveness.
