SOUTH AMERICA

Investors shy away from Brazil investment

10 years ago

Political instability, difficulties in securing finance and legal uncertainty resulting from changes to regulatory frameworks have combined to deter potential foreign investors to Brazilian infrastructure projects, according to Fernando Marcondes, partner at L.O. Baptist-SVMFA.

He added that other neighbouring countries offer better investment opportunities.

The interim government headed by Michel Temer is selecting a number of infrastructure investment projects to offer to the market, although in terms of ports this will result in just the passenger terminal at the port of Recife becoming available, along with several airports and roads. Nevertheless, the government views private sector investment in infrastructure as a key way of boosting the economy.

Important issues relating to the exact model of privatisation still remain to be settled.

There are exceptions to the overall scepticism of investors, the most notable of which being the Chinese investor CCCC, which intends to acquire a stake in the proposed Wtorre port project in São Luís.

Countries such as Chile, Colombia or Peru are said to hold out much better prospects, being more business friendly environments, given better transparency and stability when terms and conditions are considered.