1. Brazil: New Initiatives for Industrial and Technological Development Opportunities for Foreign Investors June 2004 Luiz Fernando Furlan Minister of Development, Industry and Foreign Trade

2. It keeps being successful, but there is still more to know There is a Brazil that many people know SoccerCarnivalCoffeeAmazon forest

3. The Brazil that you must know Innovation, technology, competitiveness and productivity

4.  GDP: US$ 500 billion (2003);  Per capita income: US$ 2,800 (2003);  6,300 Ph.D. graduated every year;  97% of the children aged 7 to 14 are in school. The Brazil that you must know

5.  The number of current accounts in Brazilian banks increased by 28%, from 56 to 71.5 million (2000-03);  In 2003, from 18.7 millions of income tax declarations, 18.2 were submitted through the internet (97.3%);  Almost 100% of the import/export procedures are performed electronically through Siscomex – an integrated trade system;  In 2003, the volume of bank transactions made through the internet by individuals increased by 27.9%, reaching R$ 1.5 billion. The Brazil that you must know

6. Phone lines (fixed + mobile) per 1,000 inhabitants Source: International Telecommunication Union / 2002

7. The Brazil that you must know Personal Computers per 1,000 inhabitants Source: International Telecommunications Union / 2002

8. The Brazil that you must know Users of Internet per 1,000 inhabitants Source: International Telecommunications Union / 2001

9. Source: MDIC, IBGE Base: 2002 = 100 The Brazil that you must know Industrial Production

10. The Brazil that you must know Vehicles Output Source: Anfavea (x 1000)

11. The Brazil that you must know Shoes Output Source: IBGE (millions of pairs)

12. The Brazil that you must know Cell Phones Output Source: MDIC (x 1000)

13. The Brazil that you must know Steel Output Source: MDIC (x 1000 ton)

14. Source: Secex/MDIC last 12 months ending in May US$ billion The Brazil that you must know Trade Balance Target for 2006: US$ 100 billion

15. Competitive and High Added Value Export Sectors: Exports total in 2003: US$ 73 billion – Break down:  Transport materials: US$ 10.6 billion – [14.5%];  Aircraft: US$ 1.9 billion – [2.6%];  Vehicles and parts: US$ 4.1 billion – [5.6%];  Steel and metallurgical products: US$ 7 billion – [9.6%];  Petrochemical sector: US$ 4.9 billion – [6.7%];  Mobile phones: US$ 1.2 billion (to USA only) – [1.6%].

16. Source: Central Bank of Brazil (*forecast) Interest payments/Exports Net external debt/Exports 3,6 1,8 1,0 1,5 2,0 2,5 3,0 3,5 4,0 1998200020022004* 20 24 28 32 36 1998200020022004* % 19,9 36,4 16 External Exposure The Brazil that you must know

17. Industrial Modernization Economic growth, Improvements in competitiveness and efficiency Innovation and technological development Targets Focus of the New Development Initiative Development and Sustainable Growth

18.  Enhancement of the country’s technological base in areas that show potential for national and international growth;  Creation of a favorable environment for private and public investments;  Coordinated actions with states, metropolitan regions and local governments;  Employment and income generation;  Improvement of the image of Brazil abroad. Guidelines

19. Initiatives for Industrial, Technological and Foreign Trade Development Competitiveness and innovation:  R$ 15 billion (almost US$ 5 billion) of governmental investments;  Creation of the National Council on Industrial Development;  Creation of the Brazilian Agency for Industrial Development;  Horizontal and vertical policies.

20. Competitiveness and innovation:  Future bearer sectors (Biotechnology, Nanotechnology, Biomass)  Strategic options Semiconductors Software Capital goods Medical and pharmaceuticals products Initiatives for Industrial, Technological and Foreign Trade Development

21. BNDES – Programs and credit lines:  PROSOFT (US$ 35 million):  US$ 26 million already made available by June;  MODERMAQ (US$ 860 million);  PROFARMA (US$ 172 million);  Customized Capital Goods (US$ 172 million); Initiatives for Industrial, Technological and Foreign Trade Development

22. Investment Room  The Brazilian Administration is setting up an investment room designed to help foreign investors to invest in Brazil;  Its objective is to bring together decision makers from important related areas in Federal Government and make them ready and available to get in touch with anyone willing to invest in Brazil;  Fast track policies to overcome burocracy.

23. Others Telecommunications Finance Vehicles Chemicals Energy Trade FDI Composition – 2000-2003 Major Sectors Source: Central Bank of Brazil (US$ 82 billion, FDI inflow)

24. Announced Investment Plans (US$ millions) Sector20032004Share (%)2003 / 2004 (%) Mining6 49511 40134,5140,8 Steel7645 72017,3648,7 Transports2323 33410,11 337 Mechanical/Metallurgy1 0363 1959,7208,4 Electro/electronic752 2756,92 933,3 Telecommunications8632 0786,3140,8 Infrastructure12 9411 4844,5-88,5 Chemical products4578042,475,9 Petrochemicals2477502,3203,6 Others3 80519756,0-52 Total26 91533 01610022,7 Source: BNDES/MDIC

25. 2004 Outlook  FDI: US$ 14,25 billion forecast (Central Bank)  Infrastructure: R$ 298 billion PPA 2003-2007  Investment announcements: 71% growth (2003 / 2002)  Exports: US$ 83 billion Target for 2006: US$ 100 billion  GDP growth: 3.5% (2% due to exports)