BRAZILIAN NGO FOCUSES ON IMPROVING THE CLIMATE FOR DOING

UNCLAS SECTION 01 OF 02 BRASILIA 001638

SIPDIS

SIPDIS
SENSITIVE

STATE PASS USTR - MSULLIVAN
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/SHUPKA
USTDA FOR AMCKINNEY
AID/W FOR LAC

E.O. 12958: N/A
TAGS: ETRD BEXP ECON EIND BR
SUBJECT: BRAZILIAN NGO FOCUSES ON IMPROVING THE CLIMATE FOR DOING
BUSINESS

REFS: A) Brasilia 1231, B) Brasilia 1188


1. (U) Summary. In a series of recent events, the Brazilian
Competitiveness Movement (MBC),a local NGO, has sought to create
greater awareness of the barriers to doing business in Brazil and
the need to improve the local investment climate. Specifically, MBC
has explored the possibility of linking its efforts to similar
Mexican and U.S. programs, and in conjunction with U.S. Mission
Brazil has sponsored the public rollout of a World Bank report
comparing the barriers/burdens firms face in various states
throughout the country. As part of our effort to further the
Commercial Dialogue launched by Secretary Gutierrez and Minister of
Development, Industry, and Commerce Furlan (reftels),USAID, FCS,
and State will continue to work with MBC as they seek to better
establish their pro-competitiveness program. End Summary.


2. (SBU) During the month of July, U.S. Mission Brazil stepped up
its ongoing cooperation with the Brazilian Competitiveness Movement
(MBC) as we sought to move forward on the recently-inaugurated
U.S.-Brazil Bilateral Commercial Dialogue. With USAID's Economic
Development staff taking the lead, the Mission has witnessed
increased dialogue between MBC and its U.S. counterpart - the U.S.
Council on Competitiveness. At a recent July 6 strategy meeting,
Council representatives outlined the U.S. experience in seeking to
promote greater business productivity while Mexican NGOs proposed
establishing greater links to the Brazilian side. Minister Furlan
and Jorge Gerdau Johanpetter (CEO of Gerdau Steel and founding
president of MBC) led the discussion while prominent firms such as
Merck and NASDAQ contributed as well. As a medium-term goal, U.S.
NGOs proposed holding a Latin American "Competitiveness Summit" in
Sao Paulo at some unspecified opportunity in the future.


3. (U) U.S. Mission in Brazil is facilitating further partnership
between MBC and the U.S. Council on Competitiveness. Specifically,
we are investigating the possibility of sponsoring a technical
exchange program under the State-funded American Business Fellowship
Program, which is implemented by Partners of the Americas. This
exchange would aim to help MBC develop a national competitiveness
index for Brazil.

4. (U) Meanwhile, MBC, USAID, and State helped stage the July 26
public release in Rio de Janeiro of a World Bank report on "Doing
Business in Brazil." The ceremony, which included the participation
of Brazilian Trade Minister Furlan, the Embassy's Economic
Counselor, and the World Bank's International Finance Corporation
Latin American Chief Atul Mehta, was well-covered by both the Rio de
Janeiro and national media. The report, a snapshot of the
ease/difficulty of doing business in 13 Brazilian cities, compared
the various locations in terms of the time required to open a firm,
the time required to register property, obtaining credit,
fulfillment of contracts, and tax obligations. (In Brazil, the
administration of all these indicators falls to state and local
governments.) The study demonstrated a wide range of results among
the various states. For instance, while it took an average of 19
days to open a business in Minas Gerais, it took a whopping 152 days
to do the same in the country's economic center, Sao Paulo. The
report also looked at how the Brazilian cities compare with other
cities globally, providing another perspective on the time it takes
to start a business. Sao Paulo ranked 149 out of 155 major cities,
whereas Belo Horizonte, the Brazilian city with the fastest time to
start a business, ranked 30th.

5. (U) However, it took only 47 days to register property in Sao
Paulo, compared to 27 days in rural Maranhao and 88 days in the
northeastern state of Bahia. With respect to enforcement of
contracts, Sao Paulo came out on top with an average of 546 days to
obtain judicial remedies, with Rio Grande do Sul coming in last
place at 1473 days. Overall, the report shows that low income is
not a barrier to good regulation: Sao Luis in Maranhao, which has
the lowest income per capita of the states in which cities were
evaluated, ranked 5th among the 13 cities in the overall ease of
doing business. The full IFC report can be viewed at

BRASILIA 00001638 002 OF 002


http://www.doingbusiness.org/Main/Brazil.aspx .


6. (SBU) While some local business leaders saw the study's results
as discouraging, Minister Furlan had a different take. In his
public remarks, he pointed out that the report demonstrated that in
some areas Brazil was on the right path - and where it wasn't, at
least it now had a roadmap as to where it needed to improve. In its
public diplomacy efforts, post has reinforced this line. Our
message has been that if the GOB could move forward on issues such
as customs clearance and regulatory efficiency, this would benefit
both the U.S. and Brazil.

Sobel