Industry draws more direct foreign investments

Valor Econômico - 03/04/2008

The inflow of direct foreign investments (DFI) in Brazil continues impressive. In the 12 months ending in January, the net flow - which excludes the capital repatriations made by the multinational corporations - reached the record of US$ 37 billion, whereas the gross inflow was US$ 52.6 billion - also a record. The perspective of stronger and sustained growth and the greater stability make the country attractive to foreign companies' investments. Several analysts consider it is possible that the net balance remains close to the US$ 34.6 billion registered in 2007, even though the most cautious analysts bet on some retraction, due to the deceleration of the world economy. Another important trend is that the industry has received a greater share of the investments in equity interest - 39.3% last year, more than the 38.5% in 2006 and 30.2% in 2005. Besides confirming the belief of the multinational corporations in the growth of the country, the expressive flow of direct investments has been essential for the maintenance of the valued exchange, notwithstanding the shrinking of the trade balance and the strong increase of the remittances of profits and dividends. The President of the Sociedade Brasileira de Estudos de Empresas Transacionais e da Globalização - Sobeet (Brazilian Society for the Study of Transnational Companies and of Economic Globalization), Luis Alfonso Lima, remarks the growth and size of the local market as key factors for the strong increase of the direct investment in Brazil. Lima also observes that the high flow also reflects the perspective that Brazil may soon receive, from the credit rating agencies, the so-called investment grade, awarded to those that offer low risk of debt moratorium. A study from Sobeet with nine emerging countries shows that, in the two years prior to receiving the investment grade, the volume of direct foreign investments grows 45% in relation to the two previous years. In the two subsequent years, the increase reaches 174%.

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