1. 1 Banco Central do Brasil Foreign Direct Investment in Brazil Banco Central do Brasil Foreign Direct Investment in Brazil October 2001 Armínio Fraga

2. 2 FDI Benefits Long Term Stability Technology Management Jobs Taxes

3. 3 FDI Brazil: Legal Framework National Treatment Open Access No Pre-approval Process Registration at the Central Bank Free Repatriation of Capital Free Payment of Dividends Reinvestment of Profits

4. 4 FDI Brazil: Legal Framework Recent Developments Online Registration Internet Access Cost Reduction Better Statistical Data Simplification of Treatment Regulatory Consolidation

5. 5 FDI Brazil: Legal Framework Limited Access Nuclear Energy Radio, TV and Newspaper Rural Property near Frontiers Financial Services Air Transportation Post Office Services Health Care Services

6. 6 FDI Brazil: Legal Framework Recent Legal Developments Constitutional Amendments Equal Treatment Law Modifications Tax Treatment of FDI Intellectual Property Law End of Monopolies Petroleum, Mining, Power Generation Telecommunication, Insurance Domestic Transportation, Gas Industry

7. 7 FDI Brazil: Legal Framework FDI Tax Treatment Remittance of Dividends – Zero Interest over Owner Capital – 15% Capital Gains – 15% Remittances to Tax Haven – 25%

8. 8 FDI Brazil Investment Policies Macroeconomic Environment Domestic Price Stability Structural Changes in the Economy Privatization Policies Trade Opening Public Concessions Law

9. 9 FDI Brazil Reasons to Invest in Brazil Natural Resources Perception of Lower Risk Level Stable Macroeconomic Environment Domestic Market and Mercosur Market Oriented Economic Policy Freedom to Operate Democratic Values Growth and Productivity

10. 10 FDI Brazil Reasons to Invest in Brazil Brazil FDI Regime Liberalization Open Trade Policy Qualified Labor Forces Privatization Program New Exchange Policy Infrastructure and Local Suppliers Good Business Climate Stable Regulatory Regime

11. 11 FDI Brazil Investment Opportunities Telecommunications Gas and Electric Power Oil Industry Public Concessions Agricultural Projects Infrastructure Projects Small and Medium Size Enterprises

12. 12 FDI Brazil Global FDI flows increased by 31% in average between 1995 and 2000. FDI flows to Brazil increased by 44% 0 200 400 600 800 1,000 1,200 1,400 199519961997199819992000 TotalDeveloped CountriesEmerging Markets 0 20 40 60 80 100 120 199519961997199819992000 Latam and CaribeanBrazilArgentinaMexico 0 10 20 30 40 50 199519961997199819992000 BrazilChinaIndia 0 5 10 15 20 25 30 35 40 199519961997199819992000 BrazilSouth KoreaTaylandMalasiaPhilipines US$ billion

13. 13 External Financing Requirement * Accumulated in the last 12 months up to August 0 5 10 15 20 25 30 35 40 1995199619971998199920002001* US$ billion FDI Current Account Deficit Deficit 25.5 27.1

14. 14 Net FDI EquityIntercompany LoansTotal -5 0 5 10 15 20 25 30 35 1990-95 1/ 1996-97 1/ 1998199920002001 2/ US$ billion 2/ Jan-Aug 2001 1/ Annual Average 13.8 11.1 2.7

15. 15 FDI – Equity Capital USA 24% Europe 49% Tax Haven 13% Others 14% By Regional Origin Total stock in the period: US$ 159 billion * Stock in 1995 added to the flows up to Aug 2001

16. 16 FDI – Equity Capital Total stock in the period: US$ 159 billion * Stock in 1995 added to the flows up to Aug 2001 By Sectoral Destination Industry 29% Services 69% Crops, livestock and mineral extraction 2%

17. 17 FDI Inflows- Privatization By Sectoral Destination – since 1995 Mining 4% Gas 6% Banks 12% Electrical Energy 27% Telecommunication 49% Railroad 1% Insurance 1% Total in the period: US$ 31 billion

18. 18 Portfolio Investment EquityDebt Securities - 4 - 2 0 2 4 6 8 1995199619971998199920002001 Jan- Aug 2.4 -0.2 US$ billion

19. 19 Portfolio Investment: External Debt Securities US$ billion 1995 19961997199819992000 2001 Jan -Aug Fixed Rate Securities 7.13 15.88 4.04 17.59 0.97 5.58 1.96 Issued Abroad 8.05 15.94 5.65 20.52 2.35 5.77 2.17 Bonds 1.50 0.94 (2.59) (0.17) 3.30 3.71 2.51 Disbursements 2.13 1.51 5.00 2.70 7.71 12.22 9.20 Amortization 0.63 0.57 7.58 2.87 4.41 8.52 6.69 Notes & com. papers 6.46 14.93 8.44 20.63 (1.39) 1.89 (0.61) Disbursements9.10 17.74 15.63 24.94 11.98 6.50 5.54 Amortization2.65 2.82 7.19 4.31 13.36 4.61 6.15 Short Term Securities 0.09 0.07 (0.20) 0.06 0.44 0.18 0.28 Disbursements 0.17 0.11 0.00 0.24 0.79 0.30 0.63 Amortization0.08 0.04 0.20 0.18 0.36 0.12 0.36

20. 20 Portfolio Investment: Public External Debt US$ billion 199519961997199819992000 2001 Jan -Aug Bonds1.50 0.94 (2.59) (0.17) 3.30 3.71 2.51 Disbursements2.13 1.51 5.00 2.70 7.71 12.22 9.20 New issues1.82 1.26 2.75 2.70 4.71 6.09 7.05 Bond Swaps (Bradies)0.31 0.25 2.24 - 3.00 6.14 2.15 Amortization0.63 0.57 7.58 2.87 4.41 8.52 6.69

21. 21 Banco Central do Brasil Foreign Direct Investment Banco Central do Brasil Foreign Direct Investment October 2001