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November, 2012 MANAUS FREE TRADE ZONE Business and Investments in the Amazon Business and Investments in the Amazon.

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Presentation on theme: "November, 2012 MANAUS FREE TRADE ZONE Business and Investments in the Amazon Business and Investments in the Amazon."— Presentation transcript:

1 November, 2012 MANAUS FREE TRADE ZONE Business and Investments in the Amazon Business and Investments in the Amazon

2 Ministério da Ciência, Tecnologia e Inovação BRAZIL AMAZONAS. The Manaus Industrial Park has created economic alternative that enabled 98% of preservation of the native vegetation coverage.

3 TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

4 CREATION OF THE MANAUS FREE TRADE ZONE (Law no /1957 amended by Article 1 of Decree-Law no. 288/1967) “The Manaus Free Trade Zone is a free import and export trade area where special tax incentives apply, set up with the objective of creating in the interior of the Amazon Region an industrial, commercial and agricultural center under economic conditions that allow its development, given local factors and the great distance separating it from its markets” AGRICULTURAL AND CATTLE-RAISING DISTRICT INDUSTRIAL DISTRICT

5 1 – CONTEXT OF ZFM IN BRAZIL Area: ,599 km2 GDP: 2,294 (trillions – US$) GDP per capita: US$ Population: 193 millions Municipalities and their Federative Units Position occupied by the 100 largest cities Gross Domestic Product at current prices($ 1000) Holdings percentage (%) relative São Paulo/SP1º ,6912,02 Rio de Janeiro/RJ2º ,475,43 Brasília/DF3º ,904,06 Curitiba/PR4º ,371,41 Belo Horizonte/MG5º ,911,38 Manaus/AM6º ,541,25 Porto Alegre/RS7º ,241,17 Salvador/BA8º ,581,01

6 AMAPÁ Macapá-Santana Boa Vista RORAIMA AMAZONAS Manaus Itacoatiara Tabatinga Rio Branco Vilhena RONDÔNIA Guajará-Mirim ACRE Cruzeiro do Sul Porto Velho BRASIL Ji-Paraná Bonfim Brasiléia- Epitaciolândia COVERAGE OF THE MANAUS FREE TRADE ZONE MODEL Free Trade Areas (09) Regional Offices (05) SUFRAMA Headquarters WESTERN AMAZON (*)

7 2 - WHAT IS SUFRAMA? TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

8 SUPERINTENDENCE OF THE MANAUS FREE TRADE ZONE - SUFRAMA A Federal Public Administration Body connected to the Ministry of Development, Industry and Foreign Trade (MDIC). Its objective is to manager and control the tax incentives granted to companies that set up in the Manaus Free Trade Zone, as well as to promote development strategies for the Western Amazon, assuming in this way the role of an investment stimulation agency. SUFRAMA Ministry of Development, Industry and Foreign Trade PRESIDENCY OF THE REPUBLIC

9 3 - THE AMAZON AND SOCIOECONOMIC MANAUS TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

10 2 – SOCIOECONOMIC ASPECTS: : AMAZONAS E MANAUS AMAZONAS ( NUMBER OF MUNICIPALITIES = 62) Gross Domestic Product (R$ x 1.000) GDP per capita(R$)14.620,94 3 Industry Participation in Economic Activity in gross value added(%)41,40 4 Gross Value Added- (GVA)(R$ x 1.000) Source: IBGE

11 CITY OF MANAUS Manaus (R$ x 1000 MILHÕES) GDP GDP per capita GROSS VALUE ADDED (GVA) Population Area – Km

12 Table 1 - Comparison with ZFM Amazonian countries CountriesArea Km² (1) GDP (US$ million) Bolívia Colombia Peru Venezuela Brasil (2) Amazonas (4) Manaus (4) BILLING of PIM (3) (*) Table 2 - Sizing the PIM space in the city of Manaus AREA - MANAUS km 2 Part % Total Area11.401,0,73% in relation to the State ofAM Urban Area412,273,62% in relation to Manaus Transition Area361,963,17% in relation to Manaus Rural Area10.626,93,21% in relation to Manaus (1) Source: Index Mundi, IBGE e SUFRAMA (2) GDP quarterly (4o. quarter - Source IBGE); Exchange rate 1, Source IPEA (3) Industrial District I e II -> 3,7 hc of anthropic area (4) GDP of 2009 e exchange rate 1, Source IPEA ESTIMATE 2011 (*) BILLING US$ DOLLAR ECONOMIC ASPECTS OF THE CITY OF MANAUS INDUSTRIAL DISTRICT

13 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

14 Article 2 of Decree-Law No. 288/1967: The Executive will mark on the left bank of the Rio Negro and Amazon, a continuous area with the minimum area of ten thousand kilometers square, including the city of Manaus and its surroundings in which to install the Free Zone.

15 COVERAGE OF THE MANAUS FREE TRADE ZONE MODEL WESTERN AMAZON AMAPÁ Macapá-Santana Boa Vista RORAIMA AMAZONAS Manaus Itacoatiara Tabatinga Rio Branco Vilhena RONDÔNIA Guajará-Mirim ACRE Cruzeiro do Sul* SURINAME GUYANA VENEZUELA COLOMBIA ECUADOR PERU BOLIVIA Porto Velho BRAZIL Free Trade Areas (09) Regional Offices (05) SUFRAMA Headquarters Ji-Paraná Bonfim Brasiléia- Epitaciolândia WESTERN AMAZON (*) NATIONAL GOODS CONTROL SYSTEM Exemption from IPI, PIS/COFINS reduced to zero FOREIGN GOODS CONTROL SYSTEM For Inputs: Suspension of II, Exemption from IPI, PIS/COFINS reduced to zero For products: Exemption from II and IPI and PIS/COFINS reduction SYSTEM OF INDUSTRIAL INDICATORS 88% reduction in II, Exemption from IPI, differentiated tax percentage PIS/COFINS – 0.65% PIS and 3.0% COFINS 1º 4º 2º 3º EXPORTS (ALICEWEB) TOTAL EXEMPTION

16 5 - KEY TAX INCENTIVES TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

17 TAX INCENTIVES OF PIM – MANAUS INDUSTRIAL SECTOR STATE TAXES STATE VALUE ADDED TAX (ICMS) Credit Incentives of between 55% and 100%. In all cases, the companies are obliged to contribute to funds which finance higher education, tourism, R&D, and small and micro-companies FEDERAL TAXES IMPORT DUTY (II) - 88% reduction for the inputs to be used in industrialization processes, or proportional to the domestic added value, when dealing with information technology goods EXCISE TAX (IPI) – Exempt SOCIAL INTEGRATION PROGRAM (PIS) and CONTRIBUTION FOR SOCIAL SECURITY FINANCING (COFINS) – Zero rated for incoming materials and inter-industry internal sales and 3.65% for sales of finished goods to the rest of the country. INCOME TAX (IR) - 75% reduction in taxes on income and nonrefundable additional fees, exclusively for reinvestment. Common to all the Legal Amazon Region. SUFRAMA SUDAM SEFAZ/AM

18 6 - BASIC PRODUCTION PROCESS TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

19 BASIC PRODUCTION PROCESS - BPPs Decree No. 783, of March 25, 1993 PROJECT APPROVAL REGISTRATION AT SUFRAMA ISSUANCE OF LO (Operation Report) ISSUANCE OF LP (Production Report) MACHINERY IMPORTS/ ACQUISITION INPUT IMPORTS/ACQUISITION DELIVERY OF LTAI ( Technical Report of Independent Auditing Firm ) ISO 9000 PRODUCTION Yearly 30 months INDUSTRIAL INDICATORS Immediate R&D EXPORTS Where applicable PROJECT PRESENTATION PROJECT ANALYSIS

20 COUNTERPARTS REQUIRED OF THE COMPANIES FOR INCENTIVES GRANTED Compliance with the Basic Production Process (BPP); Creating Jobs in the Region; Granting social benefits to the workforce; Incorporating state-of-the art product and production process technologies; Increasing productivity and competitiveness levels; Reinvesting profits in the region; Investing in the training and qualification of human resources for scientific and technological development; and Approval of the industrial project within the annual inputs importation limits;

21 7 - REGIONAL LOGISTICS TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

22 ATLANTIC OCEAN PANAMA CANAL Miami Los Angeles OCEANO PACÍFICO LOCATION IN RELATION TO MARKETS POPULATION OF LATIN AMERICA AND THE CARIBBEAN: 574 million inhabitants NORTH AMERICA ASIA CENTRAL AMERICA AFRICA EUROPE Manaus Porto Velho São Paulo Belém Tokyo Taipei Taiwan Hong Kong Caracas Capital Sea route Air route Road routeAir and sea route River route

23 EDUARDO GOMES INTERNATIONAL AIRPORT PORT OF CHIBATÃO AURORA EADI PORT AND AIRPORT INFRASTRUCTURE PUBLICLY OWNED PORT: - PORT OF MANAUS Largest floating port in the world Total area: 94,923 m² PRIVATELY OWNED PORTS: - SUPERTERMINALS Storage Area: 8,000 m² - CHIBATÃO Storage Area: 17,600 m² - AURORA EADI Storage Area: 9,000 m² EDUARDO GOMES INTERNATIONAL AIRPORT: - CARGO TERMINAL Total area: 49,000 m² Third largest airport in Brazil in terms of cargo PUBLICLY OWNED PORT: - PORT OF MANAUS Largest floating port in the world Total area: 94,923 m² PRIVATELY OWNED PORTS: - SUPERTERMINALS Storage Area: 8,000 m² - CHIBATÃO Storage Area: 17,600 m² - AURORA EADI Storage Area: 9,000 m² EDUARDO GOMES INTERNATIONAL AIRPORT: - CARGO TERMINAL Total area: 49,000 m² Third largest airport in Brazil in terms of cargo PORT OF MANAUS SUPERTERMINALS

24 BUE MVD RIG SSA SUA FOR PEC PORTO VELHO AP PA AM RO BELÉM BRAZIL Rout highway and rives highway OCEANO ATLÂNTICO Porto Alegre SSZ SEP Belo Horizonte Rio de Janeiro São Paulo MAO DISTRIBUTION FROM PIM SOUTH DIRECTION PORTS -MANAUS - FORTALEZA -SUAPE -SALVADOR -SEPETIBA -SANTOS -RIO GRANDE -MONTEVIDEO -BUENOS AIRES NORTH DIRECTION PORTS -BUENOS AIRES -MONTEVIDEO -SANTOS -SEPETIBA -SALVADOR -SUAPE -CEARÁ -MANAUS SOUTH DIRECTION NORTH DIRECTION Transport Mode by highway and rivers most utilized Routes to the Southeast and South of Brazil: Manaus – Porto Velho – Cuiabá – Campo Grande – São Paulo: average of days (highway and rivers) Manaus – Belém – Goiânia – Porto Alegre: average of days (highway and rivers) Manaus – Belém: 4-5 days (via the Amazon River) Manaus – Porto Velho: 3 days (via the Madeira River ) Manaus – Boa Vista: hours (highway) or 1 hour (air)

25 8 - ECONOMIC INDICATORS OF ZFM TOPICS 1 - CONTEXT OF NATIONAL ZFM 2 - WHAT IS SUFRAMA? 3 - THE AMAZON AND SOCIOECONOMIC MANAUS 4 - AREA OF COVERAGE MANAUS FREE TRADE ZONE 5 - KEY TAX INCENTIVES 6 - BASIC PRODUCTION PROCESS 7 - REGIONAL LOGISTICS 8 - ECONOMIC INDICATORS OF ZFM

26 Indicators Billing (USD billion) 10,62 41,1 Jobs (monthly average) at the PIM Total Investments Made (USD billion) 2,76 10,7 Nationalization Index 47,04% 44,51% Regionalization Index 27,75% 25,66% Federal Taxes Collected (BRL billion) 3,72 12,35 Total Taxes Collected (BRL billion) 6,28 21,10 MACROECONOMIC INDICATORS Source: Indicator systems October of 2012

27 Indicators Billing (USD billion) 10,62 41,127,7 Jobs (monthly average) at the PIM Total Investments Made (USD billion) 2,76 10,7 10,019 Nationalization Index 47,04% 44,51%40,17% Regionalization Index 27,75% 25,66%24,67% Federal Taxes Collected * (BRL billion) 3,72 12, Total Taxes Collected * (BRL billion) 6,28 21, MACROECONOMIC INDICATORS OF PIM Source: Indicators System September of 2012 – partial data * Data to October of 2012

28 SOME OF THE MORE THAN 600 COMPANIES IN THE MANAUS INDUSTRIAL SECTOR – PIM Foreign Companies

29 SOME OF THE MORE THAN 600 COMPANIES IN THE MANAUS INDUSTRIAL SECTOR – PIM Domestic Companies

30 Source: Indicator systems September of 2012 CONSUMER ELECTRONICS 34.46% OTHERS 3.9% WATCH-MAKING 1.52% DISPOSABLE 2.17% THERMOPLASTICS 4.70% INFORMATION TECHNOLOGY GOODS 11.51% CHEMICALS 13.7% TWO WHEELS 19.76% MECHANICAL GOODS 3.61% METALLURGY 4.67% TURNOVER BY MARKET SEGMENT MAIN SEGMENTS IN 2012*

31 MAIN PRODUCTS FROM THE AMAZON Source: SUFRAMA – MDIC/ ALICE SYSTEM October º OTHER PREPARATIONS FOR THE PREPARATION OF BEVERAGES 2º MOTORCYCLES WITH PISTON ENGINES ALTERNAT.125CM3

32 MAIN DESTINATIONS AND ORIGINS OF THE PRODUCTS FROM THE AMAZON 1º CHINA 36,13% 2º SOUTH KOREA 15,28% 3º UNITED STATES 11,36% 4º JAPAN 9,99% 5º TAIWAN (FORMOSA) 4,84% 6º TAYLAND 3,38% 7º MALAYSIA 3,20% 8º GERMANY 1,83% 9º HONG KONG 1,36% 10º MEXICO 1,12% 1º ARGENTINA24,65% 2º COLOMBIA13,77% 3º VENEZUELA13,10% 4º UNITED STATES5,52% 5º CHILE5,27% 6º GERMANY4,97% 7º MEXICO4,02% 8º PERU3,25% 9º ECUADOR2,67% 10º PARAGUAY1,81% Source: SUFRAMA - MDIC/ALICE SYSTEM Data until October of 2012 EXPORTSIMPORTS

33

34 THANK YOU. THOMAZ AFONSO QUEIROZ NOGUEIRA Superintendente da SUFRAMA +55 (92) / THOMAZ AFONSO QUEIROZ NOGUEIRA Superintendente da SUFRAMA +55 (92) /


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