Banks Join E-Commerce Boom

The market for electronic commerce payment services has just gained a heavyweight competitor, who promises to increase competition in the segment. Bradesco, Banco do Brasil and Cielo Wednesday announced the creation of Stelo, an intermediary of online payments for commercial establishments and “virtual pocketbook” for consumers.

The new company marks the entrance of banks in a field until then dominated by independent and internet-linked companies, such as Mercado Pago (owned by Mercado Libre), PagSeguro (from the Uol group), Paypal and Moip.

Known as “payment facilitators,” these companies are an alternative for retailers to the traditional payment-processing companies (like Cielo and Rede) at the time to decide on whether to accept credit card purchases. Their main appeal is to assume the risks of fraud, which is the responsibility of retailers in online purchases.

“This is the first company of its kind created by banks in Latin America,” says Marcelo Noronha, executive director of Bradesco. According to him, e-commerce transacted $52 billion last year, including airlines. The estimate is that it reaches R$74 billion in transactions in 2016.

According to Igor Senra, executive president of Moip, between 20% and 30% of commercial sales volume is transacted via facilitators.  He recalls, however, that the scope of action of the companies grew in recent years, also to transactions in the physical realm. In the spaces left by the large payment processors, they try to gain ground among small shop owners using card readers coupled to cell phones and tablets. “There (among the small shop owners) the volume is even larger. Door to door sales alone account for R$50 billion in the country,” says Mr. Senra.

Stelo’s goal is to carry out R$2.5 billion in e-commerce transactions and have 4 million active users (at least one transaction per month) through 2016. For 2018, the target is to have R$9 billion in transaction and 10 million users. “Our levers for growth are very strong, because we’re going to act simultaneously on both ends: on accrediting establishments and on reaching consumers with the virtual pocketbook,” says Ronaldo Varela, CEO of Stelo.

Stelo is in an operational test phase and will effectively begin operation in the second half. According to Mr. Varela, the company’s technological platform was developed in house, integrating its own tools with those of global technology suppliers, such as the case of its risk analysis platform.

Read more at Valor International

Opportunity to do Business with Brazil

Exploring Business with Brazil: Projects and Opportunities

Tuesday, May 13th, 2014
3:30 pm Registration Opens
4:00 pm Program Begins
6:30 pm Program Concludes
1301 Fifth Avenue, Suite 1500
Downtown Seattle
 
$15 for Members
$25 for Non-Members
 
rsvp here
 
Join the Trade Development Alliance and AmCham Brazil to meet with a delegation of innovation and technology advisors and companies from Brazil, get first-hand information about how Brazil is fostering its own “innovation economy”, and explore opportunities for partnership and collaboration.Brazil is an important business partner for Greater Seattle and Washington state, importing over $2.6 billion in merchandise from Washington state in 2013. Brazil also recognizes the importance of entrepreneurialism, as seen with PRIME, a project launched by Brazil’s Financing Agency for Projects & Studies (FINEP) which supports startups.About the DelegationThe main purpose is to introduce Brazil and its opportunities to American companies interested in foreign trade in order to foster business and strengthen relationship between both countries. It will be also a great moment to meet American executives to know more about the regulation and opportunities in the visited states, as well as its best practices and success cases, aiming to promote and establish business partnerships.

The State of Sao Paulo is Brazil’s largest state with some 40 million inhabitants. The state is a major driver of Brazil’s economy and home to a highly skilled labor force.

Rio Grande do Sul is the southernmost state in Brazil. It is the largest wine producing center in Brazil, known for its vinticulture and industrial output.

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Featuring:

 Renato de Barros Silva – Business Development Manager, Investe São Paulo 

Hélio Moraes – Partner, Pinhão & Koiffman Advogados 

Mariana Pfitzner  Director of Economic Development, Campinas City Hall (to be confirmed) 

Representative from the State of Rio Grande do Sul

Camila Galvão – Partner, Machado Meyer, Sendacz e Opice Advogados (to be confirmed) 

Charleen Baumgart – Head of International Product, Santander (to be confirmed)

Sérgio Pessoa – General Manager, Apex Brasil (to be confirmed) 

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Registration: The cost for this program is $15 for members $25 for Non-Members. Questions? Contact Samantha Paxton at (206) 389-7319/ samanthap@seattletradealliance.com.

 

Thank you to our Co-Sponsor:

AmCham Brazil

Investors Optimistic about Brazil

According to an investor survey by Franklin Templeton Investments in Toronto, the two most bullish countries right now are India and Brazil. Investors there expect year-ending returns on equity funds of more than 13.5%.

This is also an election year, so the country finds itself at a political crossroads too. Dilma is expected to win, but her re-election will not be as easy as once thought. If she is re-elected, Brazilians and the market will be expecting changes in economic policy.  Middle class citizens will expect Dilma to make good on promises to improve infrastructure and public services, like health care and education.  The market will expect stability on macro-economic policies, rather than Dilma’s preferred method of short term tax breaks in hopes to spur consumption and job creation.

Since 2005, Brazil has relied on a consumption-driven growth model that was made possible by a favorable global environment of high commodity prices and ample liquidity. This liquidity allowed consumption to expand without Brazil “hitting the wall” against possible external constraints, Volpon said during the 2014 Brazil Summit in New York at the Harvard Club on Monday.

Brazil managed to avoid its boom-bust cycle of old, but did not avoid a serious correction to its economy pre-Dilma.  Or as the Financial Times put it this year, Brazil’s “go-go” economy has become a “so-so” economy under Dilma.  Some of the fault lies in the external landscape beyond her control. But a chunk of it also lies with Brasilia.

Today’s model — the “Lula model” — has many now well-recognized deficiencies. However, it allowed a large section of Brazilian society to become participants in society. Lula made this a goal of his first term in the early 2000s, and delivered on the promise to diminish poverty in the northeast and keep poor children in school.

The Lula model began to show its limitations in 2009. Specifically, the low growth in industrial production seen after 2010 and the persistent increase in service sector inflation were signals of severe supply-side constraints, and it is because of these that we have seen low growth ever since, Volpon said.

Brazil’s President Dilma took over the “Lula Model”, but changes to the world economy post-2008 made that model difficult to continue. Despite solid wage growth and low unemployment, Brazilians are less happy now than they were four years ago. Disdain over lackluster public services, high taxation and Dilma’s economic policies threaten her shot at re-election in October.

“One way to understand the errors made by the Rousseff administration during 2011 and 2012, the years of the new economic matrix, is that the government made a fundamental mis-diagnosis of why Brazil was seeing low growth, which emphasized demand-side factors at the detriment of the supply side of the economy,” he said.

Brazil will have to reverse course to some extent, and that is making some analysts pessimistic about a true turnaround.  Punishing demand means higher interest rates, or higher unemployment, or stagnant wage growth.  This worries investors as much as it does everyday Brazilians.

But like the new currency plan in the mid 1990s that saw Brazilians throw away Cruzeiros for Reals, and like the Lula model of stable inflation and wealth redistribution, Brazil is ready for its third act.  The Central Bank has shown more interest in defeating inflation and keeping it under 6%. The market likes Central Bank governor Alexandre Tombini. It’s not so sure about Dilma and Guido.

In poll after poll, Brazilians of all social classes have expressed concern over volatile inflation. It’s made them overlook historically low unemployment and solid gains in real income, which continued under Dilma even as the economy weakened.

“What I see here is a manifestation, like in 1994 and 2003, of Brazilian society holding economic stability as a core value,” Volpon said. In Brazil, playing with inflation is a losing proposition for presidents.

“This political reality will go a long way to push the current economic debate in the right direction, regardless of who wins in October,” Volpon said.

Year-to-date, the iShares MSCI Brazil (EWZ) exchange traded fund is up over 3.8%, beating the benchmark MSCI Emerging Markets Index, plus the S&P 500, MSCI Europe and MSCI Japan.

Not bad for a core member of the “Fragile Five.”

-Kenneth Rapoza for Forbes

Rousseff says, “Nothing will destroy Petrobras”

Kenneth Rapoza from Forbes reports the Brazilian president stands strong with the oil giant.  Mired in a political scandal involving money laundering and bogus government contracts, Brazilian oil firm Petrobras is being used by the political opposition to derail President Dilma Rousseff.  Not one to mince words, Dilma had some Monday morning advice for presidential hopefuls: “No one and nothing will destroy Petrobras,” she told a gathering of Petrobras employees in Pernambuco state today.

Later this week, Congress will begin one of its favorite tasks since the Workers’ Party took over the government nearly 12 years ago: inquiries into wrong doings by the party. The last and most famous inquiry was into the so-called ” mensalão” scandal, which involved heavyweights from the Workers’ Party closely affiliated with then-president Luiz Inacio Lula da Silva. The pay-for-play scandal led to the downfall of many of the party’s lead singers, and now the opposition — led by the Social Democrats, know as the Tucanos — hopes the same can be said about Dilma.

Dilma is slipping in the polls. That doesn’t mean she won’t be re-elected in a second round of voting. Still, the opposition thinks her decline is a sign they can further chip away at her…and the possibility of 16 years of Workers’ Party rule.  The party, long seen as the ugly and poor labor left in a country whose main opposition is a more elite and educated left, captured Brazil’s heart in 2002 with the Lula election.  Surprisingly, the economy — including Petrobras — has been growing quite well ever since.

Today, barring the return of ex-Workers Party senator Marina Silva to the fore, Dilma is seen heading into a run-off election with Tucano senator Aécio Neves from Minas Gerais state.  If history — and poll data — is to be trusted, the Workers’ Party will yet again triumph over their “ refined” rivals.

Enter Petrobras.

This oil giant is the mud they’ve chosen to sling at her.

Petrobras is being investigated for overspending by several hundred millions of dollars on a Texas oil refinery.  In addition, a government agency is investigating allegations that Petrobras management — namely Nestor Cervero, who was fired last month — took bribes in exchange for steering contracts to SBM Offshore, a Dutch oil-production ship leasing company.

Petrobras CEO Maria Graça Foster will face questioning by the Senate on Tuesday over the oil refinery, which sits at the center of the scandal.  She will be asked how the company failed to notice that it was being more than triple the market rate for the Pasadena refinery.

Petrobras is Brazil’s largest company by market cap, and one of the most important contributors to the economy.  In 2007, it became the darling of the global oil and gas industry when it struck black gold deep under the ocean bedrock off the coast of Rio de Janeiro. Market analysts quickly gave Petrobras a price target of $60 per share.  It hit over $72 in May 2008 when the country was granted investment grade status for the first time.  The share price is now in the low teens.

Even though investors have always viewed Petrobras as the state-owned-enterprise that it is, Dilma has made it clear that under her, Petrobras is more a function of the state than the market.  Petrobras has been used to control inflation as it usually sells gasoline and diesel below market rate.  Prices are only high at the pump because of Brazil’s exorbitant taxes.  Petrobras is also involved in Brazilian cultural activities and has become a vital part of arts and entertainment funding.

“Petrobras is bigger than all of us,” Dilma told a gathering of oil workers, cheering her name. “Petrobras is as big as Brazil.”

Can Brazil Defend Democracy in Venezuela?

An article in the Economist, for example, recently stated that “most of the region has been uncritical of Mr Maduro since the protests began in early February; Brazil, the regional heavyweight, has been characteristically mute.” The Wall Street Journal, in an article entitled “Venezuela Crackdown Meets Silence in Latin America,” reported that “Brazil’s president Dilma Rousseff has stayed on the sidelines.” A New York Times article reported that Dilma Rousseff “has not commented on the crisis in Venezuela” and that “Brazil’s foreign minister, Luiz Alberto Figueiredo, has also sidestepped any Maduro critique.” The Times quoted Michael Shifter, president of the Inter-American Dialogue, saying that “now it’s, ‘We’re focused on democracy in our own country, but if something happens with a neighbor we are not going to say anything.’”

Criticism has come not just from sources outside Brazil but from within Brazil as well. Former president Fernando Henrique Cardoso wrote in early March that Brazil’s current government was acting with “incredible timidity” in the face of human rights abuses in Venezuela.

Brazil has so far taken a noticeably soft, even passive line toward the current crisis. Rather than at least issuing statements pointing out that both the Venezuelan government and opposition share some of the blame, Brazil has co-issued three rather bland communiqués through the Union of South American Nations (UNASUR), the Community of Latin American and Caribbean States (CELAC), and Mercosur. The latter statement was particularly controversial among those hoping to see Brazil productively engaged, as it was generally interpreted as being soft on the Maduro government, characterizing protesters as antidemocratic forces.

In response, Brazil’s Foreign Minister Luiz Alberto Figueiredo defended his country’s strategy, arguing in an interview with Folha de São Paulo that the Mercosur statement had been “misunderstood.” Yet when the reporter asked whether Mercosur leaders had tried to send a message to President Maduro, the foreign minister replied that “Maduro did not need a message”—hardly a sign that Brazil was eager to try to exert some positive influence on the Venezuelan government.

It would be wrong, however, to argue that Brazil’s passive rhetoric so far vis-à-vis the Venezuelan crisis is proof that it does not care about defending democracy in the region. Quite the contrary: over the past decade, helping consolidate democracy in the region has become one of Brazil’s principal foreign policy goals. Starting during Cardoso’s presidency (1995–2002), Brazil has often assertively engaged in political events in the region, diplomatically intervening when political crises have threatened democracy. Partly to strengthen regional institutions and partly out of fear of being seen as a bully, Brazil usually acts through Mercosur and UNASUR—a strategy that, while correct in principle, at times leads to less agile actions than acting bilaterally might. In addition, Brazil has been more concerned about constitutional crises and the possibility of an undemocratic removal of any presidents in the region than about what some Brazilian officials consider to be “procedural aspects” of democracy, such as free speech.

An important test of regional leadership is whether Brazil can help bring the government and the opposition in Venezuela to the table to overcome the current standoff. A negotiated settlement must oblige the government to disband the armed militia groups, release all those imprisoned for peacefully taking part in street protests, end restrictions on both the printed media and social media, and allow greater space for political activity generally. In return, the opposition must give up any aspirations of ousting President Maduro outside the normal electoral channels, and commit to curbing violence in protests.

In April 2002, President Cardoso was active in behind-the-scenes negotiations to return the then Venezuelan president, Hugo Chávez, to power in the forty-eight hours after he was deposed by a coup d’état. The incoming government led by President Luiz Inácio Lula da Silva kept working with all sides to assure continued political stability. While today’s crisis in Venezuela is different, Brazil will yet again have to engage and assume regional leadership, whether through UNASUR and Mercosur, or bilaterally. With trust largely eroded between the government and the opposition, it seems increasingly unlikely that Venezuela can solve the crisis on its own. A credible outside arbiter is needed.

WHY BRAZIL HOLDS BACK

In contrast to the Venezuelan crisis of 2002 and 2003, when Brazilian Presidents Cardoso and Lula were able to positively influence the internal dynamics in Venezuela, Brazil today is a far less credible mediator than it was a decade ago.

Back in 2003, Lula insisted on including the United States and Spain in the group “Friends of Venezuela,” which helped bri

ng the government and the opposition together. Lula’s move proved crucial as it convinced the opposition to seriously engage in the debates. Lula may have been a left-wing president, but he was still seen as a legitimate and relatively impartial mediator. Both he and Brazil have since then lost this status, principally in the eyes of the Venezuelan opposition. After Chavez’s death, Lula—still one of the most powerful political actors in Brazil and highly influential with the current administration—actively supported Nicolás Maduro’s campaign, a move that firmly placed Brazil in the chavista camp.

While one should be careful not to exaggerate the importance of ideology when explaining Brazilian foreign policy, it is certainly true that the strong affinity withchavismo of leading Brazilian foreign policy makers, such as presidential adviser Marco Aurélio Garcia, has played an important role.

Yet economic interests are likely even more important in shaping Brazil’s thinking and action. Large Brazilian construction firms have projects in many parts of Caracas. While many other foreign firms have been expropriated or castigated by the Venezuelan government, Brazilian investors have received preferential treatment—though now an increasing number of payments are being severely delayed to Brazilian investors as well. According to Valor Economico, a Brazilian business daily, Venezuelan public sector companies now owe Brazilian companies $2.5 billion. If political tension and conflict increases still further in Venezuela, Brazilian business interests would be increasingly in danger from the spillover economic problems. Accordingly, a growing number of private sector representatives have attempted to put pressure on Dilma Rousseff to take a clearer stand.

Yet the Brazilian president’s centralizing leadership style and limited interest in foreign policy—especially as she is preparing for the upcoming presidential election—have turned Brazil into a far more hesitant and less visible international actor than was the case under Cardoso or Lula. A growing number of critics point out that in addition to failing to develop Brazil’s regional vision further, Rousseff’s foreign policy is characterized by a lack of participation and overall diplomatic retreat, in sharp contrast to Lula’s highly active, albeit sometimes controversial, foreign policy. While Presidents Cardoso and Lula provided their foreign ministers with ample room for maneuver (a writer in Foreign Policy once wondered whether Celso Amorim, Lula’s foreign minister, was “the world’s best”), both foreign ministers under Rousseff have faced strong internal restraints.

Read more at the Carnegie Endowment for International Peace

 

Brazilian VP visits Council on Foreign Relations

Brazilian vice president Michel Temer visits CFR to discuss Brazil’s current economic status, its success in attracting foreign investment, and its progress in reducing extreme poverty in a conversation with Foreign Affairs editor Gideon Rose. Temer credits the 1988 constitution with creating the political and institutional conditions that have made Brazil’s recent economic rise possible. He also says that recent tensions between the United States and Brazil as a result of the Edward Snowden leaks do not endanger the long-term relationship.

 

 Watch the video here

 

Brazil urges Citizens to use Banks

Heleno Alves, 43, who makes and sells clothes in Fortaleza, Brazil, says he pays his eight employees in cash because they don’t have bank accounts.

Neither does a good chunk of Brazil’s expanding consumer class, much to the disappointment of the Central Bank of Brazil and the banking industry, both of which would like to yank money out from under mattresses and put it to work.

Brazil’s central bank is on a mission to take banking services to Brazilians like Mr. Alves. It wants to educate banking novices about how to use the financial system, but faces an uphill struggle. Mr. Alves himself rarely uses his own bank account, and only deposits money he doesn’t immediately need.

“I like to buy my things in cash,” says Mr. Alves. “It’s safer.”

That conflicts with the view of the experts, who say that banking is safer than walking around the streets with a month’s salary in your pocket. But Brazilians such as Mr. Alves struggle to understand how banks work and are reluctant to hand over their money.

“More than half of Brazilian workers get their salary in cash,” says Elvira Cruvinel Ferreira, head of the central bank’s financial-education department. “This isn’t safe. Just to walk home with that cash makes them a target for robbers.”

The Brazilian central bank estimates that some 53 million Brazilians, or about 40% of the total adult population, don’t have a bank account. Many live too far from a bank branch, which can be hard to find outside major urban centers.

Still, that’s not much under the 50% global average, according to the World Bank’s Global Financial Inclusion survey, funded by the Bill and Melinda Gates Foundation.

Brazil’s financial-inclusion effort means reaching out to people in the most far-flung areas of this U.S.-size country — territories covered by rain forest, savannah or desert-like land — as well as to poor families in urban areas where Brazil’s infamous social gap, albeit shrinking, is still at play.

As a result, an unusual feature has developed: there are a huge number of so-called banking agents such as lottery houses, where many Brazilians carry out basic banking services such as paying utility bills. These lottery houses are far more common in low-income neighborhoods than bank branches or ATMs. But in some ways they mean people feel they don’t need to use banks.

“Bank agents such as lottery parlors work as a replacement for costly bank branches and are widely available in most parts of Brazil,” says Caitlin Sanford, a researcher at Boston’s Bankable Frontier Association, a consulting group. But that’s not enough, says Ms. Sanford, and banking agents can’t replace branches, particularly in terms of service and security.

Some other parts of the developing world are looking to replicate Brazil’s banking agent model. Using more banking agents is something Abraão de Vasconcelos, governor of East Timor’s central bank, is trying to apply to his tiny Asian island nation of 1.2 million.

“Opening a bank branch in East Timor costs around $200,000,” Mr. Vasconcelos said, “but the clientele in rural areas isn’t big enough” to justify the investment, he said.

Mr. Vasconcelos, who was in Brazil last year for a three-day event on the financial inclusion held by the Brazilian central bank, said his institution has stepped in to direct the banking industry on the expansion of bank agents,  but the plan is yet to get off the drawing board.

The Central Bank of Brazil is giving away educational brochures with titles such as “What is money,” “What is a central bank,” “What are banks” and “The ghost of inflation.” It has also developed a smart-phone app called Calculadora do Cidadão (The Citizen’s Calculator) to help users calculate everything from how long it will take to pay off a loan to how much a given investment will return.

Ironically, though, as more people are brought into the financial system, many aren’t prepared to deal with loans, credit and investments.

“I’ve overused my first credit card,” said Mr. Alves as he packed up unsold t-shirts at his stand in a recent balmy evening in Fortaleza, as waves broke just 300 feet away. “I had to get a deal with the bank to clean up,” he said.

Now, he keeps his card safe at home, rather than dealing in the amazing new world of banking.  Read the article here. 

 

Brazil Installs “Spy Proof” Email System

BRASILLIA: Brazil’s defence ministry has started installing a secure digital communication network for federal government offices, a government source said.

The system aims to protect official emails from the type of surveillance US intelligence agencies were reported last year to have carried out on Brazil’s President Dilma Rousseff and her top aides, reported Xinhua.

The coordinator of the federal government’s data processing service Serpro, Marcos Mello, said the system uses passwords and digital markers to safeguard emails from snooping, as well as certifying the authenticity of the email’s origin.

The system employs “digital signatures and encryption to ensure the integrity and confidentiality of the message”.

“All the security tests were done” on the system, including “a simulated break in”, Mello added.

Government intelligence worked on developing the software with the help of the Federal University of Santa Catarina.

The system is expected to be fully installed at the defence ministry by June 30, and in all federal government offices by the end of 2014.  Read more here.

Consulado Itinerante em Seattle – Dias 4 e 5 de abril de 2014

Consulado Itinerante em Seattle – Dias 4 e 5 de abril de 2014
O Consulado-Geral do Brasil em São Francisco informa aos cidadãos brasileiros e suas famílias que vivem na área de Seattle que haverá Consulado Itinerante nos próximos dias 4 e 5 de abril.
Durante o Consulado itinerante serão processados apenas documentos que, por lei, exigem a presença do interessado:
1 – Autorização de viagem para menores
2 – Registro de nascimento
3 – Registro de casamento
4 – Atestado de vida
5 – Certificado de alistamento militar
6 – Procurações
7 – CPF – Cadastro de Pessoa Física
8 – Regularização da situação eleitoral
OBS: NÃO serão processados pedidos de passaporte durante o Consulado Itinerante em Seattle. Os passaportes podem ser requeridos via postal, conforme instruções neste website.
O Consulado Itinerante em Seattle, WA
Onde: Kitanda Açaí and Espresso
12700 NE 124th St #2
Kirkland, WA 98034
(425) 820-4371
Quando: 4 e 5 de abril de 2014
Horário: de 10h00 a 16h00