IT industry blames "Brazil cost" for poor performance, expects recovery in 2013

Wednesday, December 26, 2012

The so-called "Brazil cost" - a set of structural bottlenecks hampering companies' competitiveness - is the main reason for the local IT industry's poor performance in 2012, according to the IT segment director of the electrical and electronics industries association Abinee, Hugo Valério.

The operational costs associated with doing business in Brazil, which range from limited logistics and insufficient infrastructure to high taxes and exchange rate, have made locally manufactured goods more expensive when compared to imported products, especially Asian ones, notes Valério.

The Brazilian electrical and electronics segment is expected to hit 145bn reais (US$70bn) in revenues this year, up 5% over 2011 but slowing down from the 11% growth last year. Electronics exports fell 5% compared to 2011, contributing to a full-year trade deficit estimated at US$33.4bn.

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He welcomed tax cuts and stimulus packages promoted by the government to fight those problems, but underlined more is needed.

"Solving the bottlenecks that strangle the competitiveness and the economy as a whole enables entrepreneurs to believe in the future. Government measures aimed at tackling these issues are vital to ensure investors' confidence," Valério said in an article posted on Abinee's website.

The executive foresees recovery for 2013, with a heated domestic market fueled by easy access to credit and impacted by the government's recent announced measures, mostly aimed at lowering or cutting taxes to products and companies' payrolls.

However, many industry segments still have yet to benefit by the measures, he said, defending tax cuts for all ICT goods.

"ICT products, which are efficiency tools for corporations and individuals, should be totally exempted from taxes to promote the strengthening of the country's competitiveness."