Investments are not enough to keep pace with industry's growth - Abiquim

Tuesday, December 14, 2010

Planned investments in Brazil's chemical industry are insufficient to keep pace with projected consumption growth in the country over the coming years, Bernardo Gradin, chairman of the national association of chemical industries Abiquim, told journalists at the chemical industry annual meeting in Sao Paulo.

Investments in industrial chemicals are forecast to reach US$26.1bn in 2009-15, according to Abiquim. Under the association's national plan, the industry will require US$167bn through 2020 in order to ensure development and eradicate the sector's trade deficit.

"We also have to bear in mind that investments already announced are focused on the short term," Abiquim's executive president, Eduardo Jose Bernini, said. However, further investments of approximately US$140bn are still necessary.

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Of the total US$167bn, some US$87bn is needed just to keep pace with Brazil's annual economic growth forecast of 4% over the next 10 years, considering the chemical industry will grow at a rate of 1.25 times faster than GDP. "That is a very modest, conservative estimate," Gradin said.

According to Gradin, if Brazil's government does not implement measures to attract more investments to the country, domestic production will not be enough to supply consumption and imports will continue to rise.

Abiquim's chairman also explained that this is a crucial moment, as Brazil is forecast to grow faster than other regions. Therefore, it would be a huge loss if the domestic industry cannot take advantage of the positive environment, he said.

Brazil has become a producer of several types of commodities, while added value products are imported, which generates jobs and revenues overseas, Gradin added.

The current exchange rate and poor infrastructure have also harmed the local chemical industry. "Our concern is that the industry cannot keep up with the country's growth."

Some measures to be considered by the government, which are also part of the industry's plan, include a review of the tax system and policies to fight unfair competition from imported products, boosted by incentives in several Brazilian state ports.