Counting on the economy

One of the major prompts has undoubtedly been the growth of the economy. This looks set to continue this year with the government and the markets both working on the same premise: 5.5% growth, up from what has been described as a small amount last year. All this while the most of the world waits with trepidation.

As Finance Minister, Guido Mantega, recently said “for 2010, the outlook for the Brazilian economy is very good”.

In practical terms, this has meant big movements in and out of Brazil. Not only is foreign direct investment set to increase 47% to $38bn this year according to a Central Bank survey, this is on top of $11.4bn international investors put in stocks and shares last year.

Outbound exports in February rose to about $ 12.2bn from about $11.3bn in January while imports were about $11.8bn up from $11.5bn the month before. And it’s not just about volumes; diversity is also important with major exports including iron ore, steel, aircraft, coffee, cars, soybeans, orange juice, ethanol, textiles, corned beef and electrical equipment.

In short, the Brazilian economy is being built on trade and its ports are the key to it.

“We know that about 95% of the movement of imports and exports pass through” our ports, said Chief Minister of the Special Secretariat for Ports Pedro Brito in an op-ed piece tellingly called ‘The New Phase of Brazilian Ports’, published at the start of last year. That Brazil has a Chief Minister of what is effectively a Special Ministry for Ports also speaks volumes for the country’s port aspirations.

Impressive though the number of ports is – at 34 main public ports and 128 private terminals – what is more important and impressive is the policy that they work within.

“We are more concerned about developing actions that allow an up-grade in our ports, the prospect of putting them among the most competitive in the world,” said Mr Brito. “We intend to assure the port sector increased reliability and efficiency, improvement in performance, low operating costs, and lower tariffs for users, with the adoption of a clear and perennial policy.”

This has been fulfilled with a policy that promotes and rewards investment in the sector and resources.

On the policy side, not only does Federal Decree 6.620/2008 – the template of ports policy – encourage investment, it also outlines adequate return on capital investment through port tariffs. Investors can propose projects and prepare feasibility studies and the analysis and approval process has been simplified.

Governmental money, to the tune of $1.8bn, is also where the mouth is. Of this, some one billion is to go to the improvement of port infrastructure while $800m is to go towards the national dredging programme. Someone, somewhere in the administrative capital Brasilia, has done their homework noting what was needed and then acted to deliver those needs.

Acknowledging there is no point having superb ports without access to them, Law No 11.610/2007 created the Brazilian Port Dredging Program. This represented a fundamental gear change to the way in which things were done.

The concept of dredging for results and the contract default was established along with international bids, payment by results and defined depths, self financing through port operational revenues, long term contracts and performance appraisal such as checking the depths regularly via bathymetrics.