Can Australia win in Brazil (Beyond the World Cup)?

11 June 2014

The Socceroos may be entering the World Cup on the back foot but Australian businesses have the opportunity to kick goals outside Brazil’s soccer fields.

With the World Cup now only moments away, the last minute rush is on to complete stadiums, airport terminals, hotels, road upgrades and other works needed to host the influx of fans heading to Brazil. If Brazil can pull off this major international sporting event, it will serve to showcase Brazil’s capability to host the 2016 Olympics and Paralympics in Rio de Janeiro, and ideally tempt foreigners to explore the local business opportunities. 

Works will go right up to the last minute and large scale strikes and protests are forecast to continue in expression of public distrust of the government’s prioritization and overspend on the event over other critically needed infrastructure and services (including sanitation, health care and schools to name a few). They reflect the social progress made over recent years with the masses now demanding responsible governance to continue the nation’s growth. 

Amidst the scramble, the soccer loving Brazilians will make sure the World Cup goes on. And with Brazil firmly in the limelight, it is timely to reflect on how far the country has come since it last hosted the World Cup in 1950.

  • Following several decades of military dictatorship, Brazil has enjoyed a stable democratic government since 1985 under a federative republic.
  • At 200 million, Brazil’s population has tripled since the 1950s. Over recent years, about 34 million Brazilians have moved into the middle class.
  • After a period of high inflation, Brazil’s inflation rate is stable at around 5%.
  • Unemployment levels at 5% are currently at a historic low.
  • Brazil currently has the largest economy in South America, accounting for about 50% of South America’s GDP.
  • Together with Russia, India, China and South Africa, Brazil is one of the five “BRICS” nations forecast as a major emerging economy. It is currently the seventh largest economy in the world with a GDP of US$2.4 trillion and is predicted to move up to fifth place over the coming decades.

Like some other BRICS nations, growth in Brazil is currently sluggish - over the past year the GDP dropped to about 2.3%. With a Federal election scheduled for October, growth is again expected to be slow in 2014.

Recognising this reality and eager to leverage off the global attention generated by the World Cup, President Dilma Roussseff has made Brazil’s agenda clear – Brazil is open for business and is looking to attract global investors in its task of developing the country.

Both the President and the opposition candidates have identified economic policy as the priority issue to be addressed by the elected government.

No doubt some of the 25,000 Australians expected in Brazil for the World Cup will see similarities between Australia and Brazil – our climate, geography, natural resource endowments, industry sectors and trading partners. These similarities underpin potential opportunities for Australian businesses in Brazil.

As major exporters of agricultural products and energy and resources, Australian businesses are well placed to take advantage of opportunities in Brazil’s growing agribusiness, mining, oil and gas and renewable energy sectors.  

With an ambitious ongoing program of modernizing the country’s infrastructure, the Brazilian government is seeking private sector partners to construct and often operate major projects including ports, airports, highways, rail and transmission lines.

Across all these sectors, the demand for services, technology and equipment presents significant opportunities for Australians to export their prowess and innovation to the Brazilian market.

Stemming from our similar climates are opportunities for scientific and technological investment in Brazil relating to common environmental and health conditions. Ongoing co-operation in these areas was agreed in 2012 under the Australia-Brazil Strategic Partnership.

A number of Australian businesses have already established successful operations in Brazil in these sectors, but opportunities will continue to grow along with Brazil’s expanding middle class which is boosting demand for higher consumer goods and education.  

Any business contemplating the Brazilian market will quickly discover that the company, tax and labour regimes (to name a few) are markedly different to Australia’s. Businesses unfamiliar with the local commercial and legal market are wise to source local expertise to navigate through the issues relevant to their business.

Beyond the final whistle and the fan fair of the World Cup, Brazil will remain open for business and Australian businesses are encouraged to explore the opportunities available. 

Anna White is a Senior Associate currently seconded to one of Brazil's leading law firms, Veirano Advogados. More information on Veirano Advogados is available from its website.

Corrs is not licenced to practice law in Brazil and this should not be construed as providing Brazilian legal advice. If you would like further advice, please contact Veirano Advogados.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.