The Business Want Checklist for Presidential Candidates
The representatives of industry are apprehensive about the proposals for the sector of the two presidential candidates, Jair Bolsonaro (PL) and Luiz Inacio Lula da Silva (PT). While waiting for a clearer signal, especially from the PT presidential candidate, they list their priorities for the next government. Among the businessmen consulted by VEJA, all cited the tax reform as the most essential for the sector, with the main purpose of solving what they classify as a “fiscal war” between states over ICMS rates. In addition, the reduction of the basic interest rate, currently at 13.75% per year, and legal stability are also seen as important issues for attracting investments to the sector.
President of the Center for Industries of the State of São Paulo (Ciesp), Rafael Cervone highlights that the sector does not cry out for protectionism, but for competitiveness. He points out that other countries have returned to promoting the industry and asks that Brazil do the same as a way of recovering jobs. “Killing the industry in Brazil and in the world turned out to be the wrong path. Today, Argentina and the United States are examples of countries that are trying to re-industrialize. We still have in Brazil a know-how of all links in the chains. That’s a heritage,” says Cervone. “We need to get away from a protectionist policy, and have a policy that innovates and guarantees competitiveness for the country. Brazil has to see itself as a nation and have a country project plan. Thinking like the Asian thinks, especially China, with a long-term policy, and it needs to start soon.”
An engineer and entrepreneur, Cervone defends that Brazil pay attention to the discussions that are taking place at the global level. “The trade war between Europe, China and the United States will no longer be about economic policies, but about industrial policy. So, once and for all, Brazil needs to discuss the role of industry and make a long-term industrial policy, with predictability and that exceeds governments. Either do it or we’re left behind. And that goes back to a tax reform,” he says. “We have three unfair competitions: those who do not pay tax, the imported product that is under-invoiced and the tax war between the states, which is crazy. To give you an idea, it is cheaper to transport a bale of cotton from Egypt to São Paulo than to transport it from the Northeast to São Paulo.”
For José Ricardo Roriz, president of Abiplast, an entity that represents the plastics industry, Bolsonaro’s project for the sector is clearer than Lula’s. “I think that today there is a consensus that Brazil needs to re-industrialize. In other words, the industry needs to have a greater participation than it has today in the economy, even to create more good quality jobs and generate more income. Now, neither of the two candidates have demonstrated their designs. What Bolsonaro did for the industry, the drop in IPI, the exemption of several taxes, is already on a very positive path. The doubts we have are in relation to what Lula will do for the sector”, says Roriz.
He believes that the Brazilian industry will gain more momentum with the implementation of the tax reform. “What the industry really wants is to be competitive. And for that we need a tax reform, we need access to competitive credit, since today the interest rates are very high”, adds Roriz. Businessman Paulo Skaf, who presided over the Federation of Industries of the State of São Paulo (Fiesp) for 17 years, defends a greater participation of the private sector in the economy. “Some of the priorities are the search for the balance of public accounts, thus allowing a significant reduction in interest rates. It is also necessary to promote a total exemption from taxes on products exported by Brazil and encourage privatization and the reduction of the state”, says Skaf.
There is a convergence of opinions when it comes to creating a more favorable environment for long-term investments in the sector. “It is necessary to have legal stability. Many investors are reluctant to make new investments because there is a great concern that something that is the rule today may change tomorrow and all the investment that was viable will be totally unfeasible”, says Roriz. “We have to escape the temptation of a protectionist policy, which guarantees only a chicken flight, in order to deal with a state policy for the sector. There is no lack of diagnoses for Brazil. We need to have the political will to want to do it”, says Cervone. According to a study by the Boston Consulting Group, producing in Brazil costs, on average, 1.5 trillion reais more than in countries listed in the Organization for Economic Cooperation and Development, the OECD.