Security, partnerships and investments

Approximately 300 international investors attended the seminar "Opportunities in Infrastructure in Brazil," held in late September in New York, to hear what Brazilian authorities had to say about investment possibilities in the country. Accompanied by ministers Guido Mantega and Fernando Pimentel and the president of the Central Bank, Alexandre Tombini, President Dilma Rousseff sought to attract foreign investment in infrastructure.

The Brazilian economy needs sustained growth, and to achieve this, it must increase its investment rate. Infrastructure is the foundation for meeting this challenge. Development is impossible without maintaining a level of economic competitiveness anchored in an adequate supply of energy, telecommunications, sanitation, and transportation.

According to the Brazilian Association of Infrastructure and Basic Industries (Abdib), Brazil would need to invest, over five years, R$ 141 billion in electricity, R$ 120 billion in transportation and logistics, R$ 98,5 billion in telecommunications, and R$ 67,5 billion in sanitation.

The federal government has had great difficulty attracting investment in infrastructure projects. Some initiatives aimed at attracting private partners have failed or fallen far short of expectations. The most recent example is the fiasco in highway concessions.

There are also other areas of responsibility for states and municipalities, such as those related to urban mobility, land use, and education and health services, which also challenge governments and require alternative ways of obtaining resources.

How can we address this extremely serious situation? How can we eliminate the bottlenecks that prevent the economy from growing and that deteriorate essential services?

The solution is to create an environment that fosters partnerships between public and private agents. In this sense, there are major obstacles to overcome.

First and foremost, it's important to highlight that one of the country's biggest problems is regulatory uncertainty. The Dilma government has changed rules relatively frequently in some sectors, and this practice discourages investors because of the risk it generates. Who would invest in a sector whose rules could change during a concession period?

Another important aspect concerns the need to make bidding processes more flexible. Law 8666/93 was created twenty years ago and should be reviewed to make the partnership process more agile.

A third aspect involves public-private partnerships (PPPs). This instrument has enormous potential to leverage investments, but adjustments are needed to make it effective and efficient.

The lack of resources for investment necessitates a new standard of relationship between the public and private sectors. It is necessary to establish mechanisms that foster a cooperative environment between government and private capital in the country. In this sense, it is essential to provide security for investors and modernize the rules for concessions and partnerships. Without this, it becomes difficult to "sell" Brazil abroad, as Dilma attempted to do.