A series of measures announced today as part of the new Brazilian industrial policy will have a series of implications for the IT sector, including lower hiring costs. IT Decisions gives a summary of the Brasil Maior plan and what it means for the technology industry.
What is Brasil Maior?
Inspired by the US Buy American Act, Brasil Maior is a three-year plan designed to help stimulate Brazilian industrial sectors and cope with adverse competitive conditions and a strong local currency. Its announcement today follows concerted lobbying and pressure from local business leaders around the need to introduce higher-impact measures in the new industrial policy.
The intention is to foster innovation, harness skills across business, academia and society to generate income and jobs, as well as boost competitiveness in domestic and foreign markets. According to the Minister of Development, Industry and Foreign Trade, Fernando Pimentel, Brasil Maior is a “courageous, daring and audacious” plan.
In terms of focus areas, the plan has eight pillars: foreign trade, investment, innovation, training and skills, sustainable production, competitiveness of small businesses, special actions on regional development and consumer welfare.
Who is leading the plan?
Alongside the launch of the plan, new representatives for the Board for Industrial Development (CNDI, in the Portuguese acronym) were also appointed. The Board provides the institutional advisory to the initiatives.
The CNDI board is formed by 13 ministers, as well as businesspeople from various sectors of industry, trade unions and presidents of professional associations. Alongside government representatives, the businesspeople will have a two-year mandate during which they will set the broad strategic guidelines and subsidize the activities around managing the industrial policy.
How will the plan impact IT employers?
The plan includes a “pilot” payroll tax relief scheme. Labour-intensive sectors such as IT, car manufacturing, textiles and footwear which are affected by the exchange rate and suffer with massive external competitiveness, will pay less taxes related to wages. The measures will reduce to zero the current 20% social security tax currently applied to such “vulnerable” sectors.
By contrast, the tax contribution will be charged based on net revenues – at a rate starting from 1.5%, according to the sector. This is intended as a compensation for losses of social security. A tripartite committee – with government officials and representatives from business and civil society – will analyze the impact of the measure.
Are there any other IT-specific measures?
The national strategy for science, technology and innovation for 2011-2014 will represent the innovation pillar of the plan. Three flagship programs for vocational and technical education to stimulate engineering are part of the strategy: the National Program for Access to Technical Schools (Pronatec), the National Pro-Engineering Plan, and the Science without Borders program. The latter initiative is intended to attract high-level foreign researchers to enable a “strategic leap” for Brazil, in terms of technological innovation.
According to science and technology minister Aloizio Mercadante, the other tech-specific areas of focus for the plan are patent generation and digital inclusion. Mercadante pointed out that in other countries, two thirds of the patents come from the private sector, while in Brazil the majority comes from the public sector.
On digital inclusion, the minister cited the National Broadband Plan and the government’s plans to equip 70 million students with an internet connection. Mercadante added that the educational system will be helped with a “leap in quality”, made possible by national content and equipment.
“Brazil is prepared to make this leap and we will give purchasing power to enable digital inclusion in schools. This buying power can enable us to have a semiconductor industry that only 20 countries currently have and a display industry that only four countries in the world have,” the minister added.
What about funding for innovation?
The National Bank for Social and Economic Development should grant the Financing Agency of Studies and Projects (Finep) R$ 2bn to augment funding for innovation under the Ministry of Science and Technology. Finep is the Brazilian body dedicated to research.
However, minister Mercadante said that this set of measures “has to be associated with a long-term vision,” adding that Brazil will only be competitive if it changes its “passive attitude” in relation to technology. He added: “Brazil is prepared to make that leap. More production, more employment and innovation.”
Image by jhf licensed under Creative Commons.
