reinforcement of business relationship between brazil...
TRANSCRIPT
Reinforcement of Business Relationship
between Brazil - Japan
ⅩⅩⅩⅩⅦⅦⅦⅦ Joint Meeting of the Brazil – Japan Economic Cooperation Committee,
Septemnber 9th, 2014, Tokyo Japan
<Contents>
1. TRADING between Japan and Brazil.
2. INVESTMENT from Japan to Brazil
3. Conclusion
25
20
8
46
0
5
10
15
20
25
30
35
40
45
50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
7
US$ BN
16
7
37
15
0
5
10
15
20
25
30
35
40
45
50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
36
US$ BN
Export to (China, USA …..) Import from (China, USA …..)
Not only China, but USA and Germany have been increasing
the trading amount with Brazil.
2014/9/8
2Source:MDIC
Brazil imports many industrial products.
Export of Brazil Import of Brazil
2014/9/8
3Source: SECEX
2.3%
38.4%
Primaly Product
Industrial
Product
Others
12.6%
Semifinished Product
46.7%
Primaly Product
Seminished
Product
Industrial Product
82.7%
3.4%
13.9%
US$
242.2 BN
(2013)
US$
239.6 BN
(2013)
Others
18.2%
Aircraft2.9%
Vehicles 2.9%
Cereals 3.2%
Pharmace
utical
4.0%
Chemical
Products
4.5%
Optical
6.1%
Plastics
6.1%
Electrical
Machinery
7.9%Medical
Products
6.3%
Fuel18.6%
Machinery
19.4%
Others
16.5%
Chemical
Products2.7%
Fertilisers3.9%
Plastics 5.0%
Optical
Equipment
6.7%
Electrical
Machinery
7.5%
Medical Products
9.4%
Pharmaceutical
Products
9.4%
Vehicles13.6%
Machinery
25.3%
Among 3 countries, there are many common products
exported to Brazil.
Others
10.1%Plastics
2.3%
Fuel
3.0%Rubber3.7%
Medical
Products 5.4%
Steel 5.8%
Optical
Equipment
7.0%
Electrical machinery
14.1%Vehicles
17.8%
Machinery
30.7%
36BN 15BN 7BN
US$ BN US$ BN US$ BN
: Common products among 3 countries
2014/9/8
4Source: UN COMTRADE
0.1
1.0
1.3
2.2
1.1
2.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Chemical
0.4
Medical
+670%
0.4
ElectronicsVehicleMachinery
1.4
+273%
+15%
+63%
+77%
3.8
Japan Germany
Japan has more chance and opportunities to increase export
to Brazil.
US$ BN
2014/9/8
5
Pequiven
Mitsubishi Gas
Chemical
Mitsubishi Corporation
Methanol production Volume: 1.6 Mtpa
Methanol
Production & Export
Import
Distribution
MC has been importing Methanol from Venezuela since
2012, and is trying to increase more.
2014/9/8
6
Time for custom clearance efficiency is the lowest level in
the world
2014/9/8
7
2.3
1.3
4.9
15.1
15.9
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
6.6
x2.4
Panama 7.6
Colombia 8.6
India
Brazil
x12
Thailand
Indonesia
Malaysia 2.7
Germany 4.7
Spain
China
Average time to clear export through customs
Source) World Bank
Days
4.24.0
3.1
1.6
3.7
3.1
1.7
4.3
3.7
2.8
2.2
2.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
2016
5.9
2015
5.8
2014
3.9
4.9
20132012
3.4
4.4
2011
3.4
2010
3.4
4.0
20092008
4.4
2007
2.8
3.0
2006
2.4
2005
3.3
2.5
2004
2.1
20032002
1.7
2.4
Production Result
Production Capacity
Forecast
MN Unit MN Unit
Source) Anfavea, Mizuho Industry Focus, Bradesco, Roland Berger
GAP
Export increase?
Domestic sales increase?
Big gap between Production Capacity and Result is
anticipated after 2015
ProjectedCapacity Expansion
MN Unit
Fiat 0.25
Honda 0.15
Hyundai 0.13
Mercedes-Benz 0.02
Cherry 0.15
BMW 0.025
2014/9/8
8
Supply and Demand Balance of Automotive industry
Source) Ministry of Development
Acceleration of FTA conclusion is expecting.
2014/9/8
9
Mercosur
ECA with Mercosur or Brazil
FTA with Mercosur including only signed countries
Preferential Fixed Tariff Agreement with Mercosur
<Contents>
1. TRADING between Japan and Brazil.
2. INVESTMENT from Japan to Brazil
3. Conclusion
10.810.4
7.9
5.1
2.4
4.85.3
9.2
1.5
2.93.5
1.2
2.7
3.9
Japan doesn’t have a big presence in FDI into Brazil.
2014/9/8
11
31,932
49,342
60,543
69,530
52,583
31,679
44,457
34,335
22,76922,04320,542
13,087
18,96021,093
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2014
JAN-JUL
2013201220112010200920082007200620052004200320022001
(%)
(BUS$)FDI Ammount
Share of Japan
MC operates the feedstuff and grain value chain.
Developing Resources
Trading Raw Materials
Manufacturing & Processing
Intermediary Distribution Retail
MC Group provides multi functions……Specialized Knowledge & Know-How
Products & Industries × Regions × Functions & Services
Information Providing
Market Needs
Logistics Investment FinanceInventory
ManagementInformationConsulting
2014/9/8
12Source: Mitsubishi Corporation do Brazil
Increase of Gross Fixed Capital Formation in Brazil is
expected.
2014/9/8
13Source: IBGE, BRICs Dictionary
18.218.1
19.1
16.016.1
17.017.016.9
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1995 1996 1997
18.3
17.4
18.4
201320122011
19.3
2010
19.5
200920082007
17.4
2006
16.4
20051998 2003
15.3
2002
16.4
20042000
16.8
1999
15.7
2001
Gross Fixed Capital Formation, as % of GDP
47
31
22
%
Source: World Economic Forum Global Competitiveness
Lack of efficiency in the Infrastructure is an obstacle to the
economic growth of Brazil.
52 59 80 93 135
30 46 1002722
66 123 1365442
87 101 1076958
Ports
Railroads
Highways
OverallInfrastructure
2014/9/8
14
Ports
Railroads
Highways
PAC is not going smoothly for Ports and Railroads.
Airport
14.0
9.9
23.9
0
5
10
15
20
25
ExecutedPAC1 PAC TotalPAC2
8.0
22.9
46.0
68.9
0
20
40
60
80
ExecutedPAC2PAC1 PAC Total
14.2
R$ B
R$ B
41.4
50.4
91.8
0
20
40
60
80
100
ExecutedPAC2PAC1 PAC Total
75.3
3.0
2.7
5.7
0
1
2
3
4
5
6
ExecutedPAC2 PAC TotalPAC1
3.8
33.5%
20.6%
82.0%
66.7%
R$ B
R$ B
Source: ILO, FIPE, Merrill Lynch
2014/9/8
15
Highaway
82.0%
Water2.0%
Rail
16.0%
Highaway
25.0%
Water
40.0%
Rail35.0%
120
80
0 20 40 60 80 100 120
x1.5
25
145
0 20 40 60 80 100 120 140
x5.8
Transportation Mode Matrix for Soybeans Warehouse Capacity
% of Annual Harvest
US$/MT
Inland Freight Cost
Inland freight cost of Brazil is much higher than USA.
Source: Bank of America Merrill Lynch
2014/9/8
16
Brazil: From Sorriso to Santos by truck, USA: From Illinois to New Orleans by vessel.
193
309
305
423
442
46
0 100 200 300 400
Rio de Janerio
65Sao Paulo
Beijing
Delhi
New York
Tokyo
Moscow
Shanghai
368
km
Total Extension of Subway in major metropolitan
Brazil has big opportunity to expand Urban Subway Network.
●●●●Bahia
●●●●Parana●●●●Sao Paulo
●●●●Amazonas
●●●●Rio de Janeiro
●●●●Minas Gerais
1.4
3.0
3.0
4.0
10.2
43.7
0 10 20 30 40
Sao Paulo
Rio de Janerio
Bahia
Parana
Amazonas
Minas Gerais
Planned PPP Subway project
km
2014/9/8
17Source: The Economist January 5th 2013
Brazil
Risk ItemDescription /
Challenges for PrivateIt’s supposed to be…
PassengerDemand
Assumption of demand risk within limited band
(sounds reasonable)
Change in Law/Tax
Public’s responsibility (sounds reasonable)
LandExpropriation
Execution of expropriation Full responsibility of Pub lic
Nationalization Requirement
Unlimited liability to sponsor in case of non-compliance
Sponsor’s liability should be limited
Force Majeure Unlimited liability to sponsorfor the damage
To be limited to equityamount
Authorizationand Permission
Private’s responsibility in some permissions
Full responsibility of Public Sector
Other Countries
UK Australia
Within limitedband
Public’sresponsibility
Public’sresponsibility
Public’sResponsibility
Public’s responsibility
Public’s responsibility
No requirement
Norequirement
Up to equity amount
Shared
Public’sresponsibility
Public’sresponsibility
Risk allocation between Public and Private sectors is a key to
develop PPP.
2014/9/8
18Source: Mitsubishi Corporation do Brazil
<Contents>
1. TRADING between Japan and Brazil.
2. INVESTMENT from Japan to Brazil
3. Conclusion
Conclusion ～～～～ Reinforcement of Business Relationship between Brazil - Japan
1. Expansion of TRADING between Brazil and Japan
1) Improvement of custom clearance process
2) Improvement of logistics infrastructure
3) Increase of high value-added products from Japan
4) EPA
2. Promotion of INVESTMENT in Brazil from Japan
1) Speed up and streamlining of the bidding process of the government
2) Goal setting with the same level as world standard infrastructure
3) Formation of unified guideline for PPP projects
4) EPA
2014/9/8
20