|Claudia Bonelli||Pedro G Seraphim|
Indeed, these factors have affected the country's agricultural, industrial and exportation competitiveness, and have certainly played an important role in Brazil's weak GDP performance in recent years. There is a relative overall improvement in the country's macroeconomic condition, aided by maintaining the ninth largest internal market in the world. Brazil has been raised to 48th place on the World Economic Forum's Global Competiveness Index 2012-2013, but it drops to 79th position when it comes to the quality of transport infrastructure.
Many factors are causing this situation to linger, but one of the clearest, and most fundamental in terms of bringing about effective change, is the regulatory structure. Particularly in the port sector, there is a change coming that may finally offer a new approach and attract the attention of private investors worldwide.
At the end of 2012, the Brazilian Federal Government issued Provisional Measure 595/12 (MP 595), which entirely revokes the Ports Act (Federal Law 8,630/1993), setting forth a new regulatory framework for the port sector. MP 595 has yet to be converted into law, and that depends on its approval by the Brazilian Congress. This approval process may result in changes to the original text, but it is expected that this new regulatory framework will foster an increase in the participation of private companies in the sector, stimulating more dynamic competition, and thus enhancing the quality of related services.
Prior to MP 595, private investors could operate their own terminals. However, they were required to use at least 51% of their capacity to process goods produced or owned by the same owner of the terminal. Only the remainder 49% could be offered as a service to third parties. So, typically, only companies with a significant exportation business (for instance, mining companies) would be interested in investing in such terminals. This limitation was an obvious hurdle to competition against the main public ports, which cannot keep up with the demand, a significant factor in the so-called Brazil cost.
With this issue in mind, MP 595 is opening the market for terminals that are located outside the public ports' area, so that they will be able to operate 100% of third parties' cargo. With the significant demand for these services, the Government is hoping that private investors will line up to build and operate new terminals throughout the Brazilian coast.
According to MP 595, the port expansion strategy will be centralised in the hands of the Ports Secretariat (SEP). ANTAQ, the National Agency for Waterway Transportation, will be in charge of granting the operation of ports and terminals (public or private) to private investors, by means of a bidding process (public ports or public terminals) or an authorisation (private terminals).
The new port regulatory framework is part of the set of actions taken by the Federal Government in order to improve infrastructure and stimulate investments in the modernisation of Brazilian infrastructure. We must closely follow the development of the process to convert MP 595 into law, and hope that it will not lose the strength of its innovations, and that it will begin to get rid of Brazil's development bottlenecks.
Claudia Bonelli and Pedro G Seraphim
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