Relaxation of foreign investment regulations
Measures have been adopted by the Brazilian government in the last two years to safeguard the economic stabilization programme by curbing money supply increases caused by foreign investment inflows. On October 31 1996, two of the measures were relaxed as follows:
- Monetary Council Resolution 2330 allows foreign capital investment vehicles to invest part of their portfolios in debentures convertible into public shares, including fixed-yield shares.
- Finance Ministry Ruling 241/96 cuts tax rates on exchange operations relating to the entry of foreign resources. Prevailing rates for currency loans with average terms of less than five years vary between 3% and 1% (previously 5% and 2%). Currency loans for more than five years and less than six years are now exempt (they were previously subject to 1% tax).
Mobile telephone services
On November 5, the Official Gazette published a number of regulations relating to Mobile Services, including Decree 2 056 and 11 Rulings by the Communications Ministry.
Mobile phone services have been classified into two bands according to the wavelengths in which they operate. Concessions in Band A will remain limited to operating subsidiaries of the state-owned utility Telebrás. These subsidiaries will subsequently be privatized.
Non-exclusive concessions will be granted to companies in the private sector winning the relevant public bids for Band B. Until July 1999, the Communications Ministry may restrict some of the bids to companies at least 51% of whose voting capital is directly or indirectly held by Brazilians. Thereafter, there will be no restrictions on foreign capital.
Brazil has been divided into 10 areas, six of which are considered to be special ones. In each band, each economic group will be allowed a maximum of two concessions, including a concession in one of the special areas. Concessions will be valid for 15 years, renewable for equivalent periods without limitation.
Tariffs, as regulated by Ruling 1537, will be established in the concession agreements, subject to annual reviews under the terms of Ruling 1535.
Ruling 1545 submits for public discussion a draft invitation to bid, including rules on the selection procedure and a draft concession agreement. Comments will be accepted until November 20.
The government is now expected to propose a new General Communications Law (LGC), a bill designed to overhaul the old Brazilian Telecommunications Code of 1962 and create a telecoms regulatory body. Until the LGC is enacted, the President of the Republic and the Ministry of Communications have authority to rule, grant and monitor mobile phone concessions.
Eliana Maria Filippozzi