The Brazilian economy is not immune to the global economic crisis, although its low export reliance, large foreign reserves and sizable domestic market have largely helped it survive the recession better than other countries in the region. Alongside the launch of various relief measures including tax incentives, revival of commodity prices and sustained return of foreign capital since the second half of 2009, Brazil’s economic prospects have been further brightened on news that it is going to host football’s World Cup in 2014 and the Rio de Janeiro Summer Olympics. In all, the Brazilian economy, after a quick comeback of 7.7% growth in 2010, is forecast to grow by 4.5% in 2011.
Hong Kong’s total exports to Brazil soared by 44% to US$1,530 million in the first eleven months of 2010, while its imports from Brazil decreased by 8% to US$1,614 million.
Current Economic Situation
The global economic crisis has clearly manifested itself in Brazil, putting an end to the country’s decade-long credit-fuelled consumption spree and foreign investment boom, despite the cushion stemming from the country’s low export reliance, large foreign reserves and sizable domestic market of over 190 million consumers. Worsening unemployment on the back of slackening demand for commodities and feeble industrial production, plus a large-scale retreat of foreign capital, drove the country into recession, depressing spending while tightening credit.
That said, Brazil has been fast regaining growth momentum after two consecutive quarters of GDP decline in the fourth quarter of 2008 and first quarter of 2009, following a slew of relief measures including tax reduction on a wide list of products including vehicles, motorcycles, construction materials, household devices (stoves, refrigerators and laundry machines) and computers for schools, further facilitated by the revival of commodity prices and sustained return of foreign capital since the second half of 2009, and news that the country is going to host back-to-back major sports events – the football’s World Cup in 2014 and the Rio de Janeiro 2016 Summer Olympics.
Looking forward, Brazil, on the back of the aforesaid sound fundamentals and the reviving demand for commodities in line with the continued but slow global recovery, is poised to continue strong economic performance beyond the crisis. In all, after a quick comeback of GDP growth of 7.7% in 2010, the Brazilian economy is forecast to grow by 4.5% in 2011.
Import transactions in Brazil are subject to regulation, authorisation and inspection by the Ministry of Finance’s Federal Revenue Secretariat (Secretaria da Receita Federal - SRF) and the Ministry of Development, Industry and Foreign Trade (MDIC)’s Foreign Trade Secretariat (Secretaria do Comércio Exterior - SECEX). To obtain such an authorisation, the importer must follow import procedures, which are currently conducted electronically by means of the Integrated System for International Trade (Sistema Integrado de Comércio Exterior), known as the SISCOMEX – a computerised system through which customs clearance and import licensing operations are processed. Enrolment is automatic upon the execution of the company’s first import transaction. Such a registration will enable the company to directly operate within the SISCOMEX system.
Once registered with SECEX, an importer must obtain an import licence for certain goods prior to the shipment of the goods. Such a licence may be obtained through SISCOMEX. There are three types of import licences - exempt, automatic and non-automatic. Most goods are exempt from import licensing requirements. However, importation of some products, such as spectacles and toys, currently requires import licences. The process and procedure of import licence application, however, are very time-consuming, involving lots of paperwork. Delays in granting of import licences have been widely experienced.
Apart from registration and licensing, Brazil applies import duties as well as a wide range of indirect taxes on imports. Import duties are Brazil’s primary instrument to regulate imports. As a Mercosur member, Brazil utilises the Mercosur Common Nomenclature (NCM) classification, which is consistent with the Harmonised System (HS) classification. In general, the customs value of goods is determined on a CIF (cost, insurance and freight) basis. Most imports from non-Mercosur members are subject to Mercosur’s Common External Tariff (CET) which ranges from zero to 35%.
To read the full version, please click here.