Governor Confúcio Moura on Investment Opportunities in Rondônia

Interview with Confúcio Moura, Governor of Rondônia

To start this interview I would like you to briefly introduce the state of Rondônia to people that do not live in Brazil and do not know the state.

The state of Rondônia is geographically the same size as the state of São Paulo and the state of Rio Grande do Sul, so the territory is quite vast. The difference between Rondônia and the other states of similar size is fundamentally its location on the map of Brazil. We are located in the northwest of Brazil, bordering Bolivia and the states of Amazonas, Mato Grosso and Acre. Rondônia is different by nature because it is a transition between the dense Amazon Rainforest and the Cerrado (Savannah), therefore it’s quite varied. The vegetation is very diverse and can be adapted to any kind of activity; from ceramic activities due to the abundance of a type of clay that exists in our state; to the natural activities of the Amazon, which is the state’s natural wealth with dense forests, wide rivers, lakes and everything else.

Rondônia is a new state, it has only been a state for 31 years, and prior to that it was a federal territory. It is a state that has grown a lot in Brazil. Today, it is one of the states that grows the most in the Brazilian Federation. Comparatively, our GDP is higher than the national GDP, due to investments in the state’s infrastructure. The state is bubbling with federal investments, private investments, resources from the official banks, and from the development banks of the Amazon state, which makes it an extremely promising state of great opportunities.

A large part of the population is from the South or Southeast of Brazil, who are original entrepreneurs from their states. They have brought their experience with them, and the good results of technological breakthroughs in agriculture and livestock breeding from the South and the Southeast of Brazil. So Rondônia is an important state.

What are the economic attractions of the state of Rondônia? What are the sectors prioritized by the government at the moment?

We have several attractions, but let’s start off with our natural wealth. There is a lot of timber in Rondônia, and there is a great possibility of utilizing it in a rational and environmentally safe manner for many years. There are also important areas for reforestation, which may attract pulp and paper industries. Also in the natural part are minerals which vary from diamonds to tin (cassiterite), there is a broad range of countless semi-precious metals and there are also rare earth elements. Rondônia has an enormous scope for mineral research. This is very important for investors in the mining sector, so they can invest greatly in mineral research in the state.

On the other hand, we have a lot of energy potential. The rivers filled with waterfalls offer a great possibility of investments in the area of electric energy, these possibilities exist in the large rivers, like the Madeira River as well as in the smaller rivers like the Machado River and other rivers that we have in the state of Rondônia.

Apart from the natural tendencies and potential there is also agriculture with the production of soybeans, rice and corn in certain regions of the state. There is also livestock breeding and today we are either the sixth or seventh largest livestock producers of Brazil. There is also the production of dairy products which is very important for the state and we have a service sector, which is essential. Basically, one of the main vocations of our state lies in the food sector. So you now have a quick glimpse of the importance of business for investors in the state of Rondônia.

You mentioned a few investment opportunities, I would like to talk a bit more about this aspect and I would also like to know what governmental programs exist to attract investors.

First of all, just the Amazon rainforest by itself has a great appeal for investments, mainly in the tourism sector, and there is also a variety of other areas which are just starting out. The long trips through our rivers are fantastic attractions to be explored in the future. We have national parks which are highly adapted for research in the natural sciences field. There are a number of animals that have not been catalogued to this day, and there are also certain plant species that are very adequate for research in the sciences. And this is all extremely important.

Brazilian banks, such as the Banco da Amazônia and the Banco do Brasil are credit agents which give incentives towards investments in all of the Amazon, and specifically Rondônia, because Rondônia’s transportation logistics are very well adjusted and more cost effective due to the Madeira waterway. The cost of freight using river transportation is a lot cheaper than any other mode of transportation, whether it be by rail, air or road. In Rondônia, we can still combine the three areas of infrastructure, transportation and logistics in a very fitting manner, and at the moment we are providing incentives to the port areas. We have huge port potential and everything can be implemented. We have a processing zone for exports; this zone consists of companies that can export up to 80% of their products and 20% is sold in the domestic market. Brazil has a huge domestic market which is very safe for investors. Our infrastructure logistics are the best possible.

The finance incentives via the Banco da Amazônia, via the Treasury or via investments with long term incentive are also very good. The interest rates are attractive. In regards to the state, there are also fiscal incentives for investors in the state of Rondônia. In terms of taxes, the only strong tax at the moment is the ICMS, which is very important, so this is a great differential. We are located in the Free Trade Zone of Manaus; therefore, all of the investors that invest in Rondônia are able to make good use of the incentives of the Free Trade Zone of Manaus. These incentives are the reduction of federal and national taxes and import taxes. The difference is that investors must contain a percentage of regional products in their final product. This can be done by using local timber or semi-precious or precious minerals, and by doing this they will be able to make use of all of the incentives that are granted to those who live within the Free Trade Zone of Manaus. All of us that are in the western part of the Amazon are in this comfort zone of these incentives; you will just need to read the legislation of the zone. Rondônia is a state with huge economic attractions and huge possibilities.

What are the greatest challenges for the state?

Our greatest challenge is regarding education, mainly technical education and a skilled labour force. So the greatest challenge of the state is to prepare investments in education in a serious manner with the planning of pre-established goals focusing on a professional middle and high school education. This is something we are working on at the moment together with the federal government. Via the federal institutes of the state we are going to provide a skilled labour force to the companies that set up in the state of Rondônia.

The second largest challenge is to get the railway axis, which is an initiative of the federal government of President Dilma, to go up to the state of Acre via Porto Velho, as a very important corridor of exports connecting a large part of the Atlantic Ocean to the Pacific Ocean. In turn, this should make it easier to export to China and other countries in Asia.

These are the challenges: the railway axis, the quality of education that we need to offer, the professional training of our youth, and to go after all of the means within the infra-structure and logistics of the ports and railway, forming a multi-modal transportation tripod; waterway transportation, railway transportation and air transportation. This is something fantastic, and it is exactly what investors want. We don’t even need to talk about electric energy because we have more than enough energy.

How do you see the state in the coming 2-3 years?

We are currently living according to the circumstances of the world today, which is currently in a moment of caution; there is a need for caution and security of investments because the world crises affects all of us. So what is thought in Europe, in the United States, in Brazil and particularly here is exactly that we need to provide legal security and attractiveness so that investors will come here because it is indeed a very safe return on investments to invest in Latin America – and the emerging countries particularly, because all of the countries offer rewarding growth rates and interest rates for foreign capital.

The short term challenges are the country’s economic stability, to maintain the country and the state and its bills well-adjusted so that the country can continue growing at rates which we can show the rest of the world with pride. This is as must for Latin America as it is for Brazil, which is the wealthiest country of Latin America. We need to show this vitality and security for investments and this is an essential point for the next 3-5 years.

You mentioned a lot of investment opportunities and benefits for an investor to come here and invest in the state. I would like you to send a message directly to international investors telling them why they should invest in Rondônia and not in another state.

First of all, Rondônia is a new state that offers very big opportunities. Secondly, because it is a state that communicates easily with the rest of the world via the rivers and the sea: the Madeira River, the Amazon River and the Atlantic Ocean. There are also opportunities of transcontinental integration due to the connection with Pacific ports, which is very important especially because Rondônia is located in the heart of Latin America. If you check a world map, you will see that Rondônia is located in the epicentre or the heart of Latin America, as if it had open arms, one arm touching the Atlantic Ocean and the other one touching the Pacific Ocean. Rondônia is a state that by nature will develop a lot. Time will tell these prophecies of mine, but they will happen. All of the companies that set up in Rondônia have a rich distribution logistic, many opportunities, the security of electric energy to maintain their industrial park and raw materials which are increasing. This is fundamental when you are getting established in areas like mining, timber, fish farming, intensive livestock farming and sustainable agriculture with high technology. With all of these indications and a safe educational base, you can’t go wrong. Of course, we are in Latin America, suffering from all of the difficulties that America has always had, but Brazil has been very bold in the last 10 years and has grown a lot in relation to the rest of the world. Today, Brazil is a country that already has a voice and has its turn. So I believe that investors who want to open a venture company with a guarantee of a return on their investment can invest in Rondônia. And this is my message.

Is there any other topic you would like to discuss?

I would like to discuss the research field because one of the key points for a country is scientific research which may even help with industrial development. It is very fertile around here for investors in the research sector. For example, we have diamonds which are located in one region of the state, but if there is research done, they will be found in other regions as well. We still have minerals like niobium (formerly columbium), tungsten, tantalum and other minerals that are all very important in the composition of metal alloys for industry and for high technology like computers, chips, etc, in strategic areas of the state. Once research is done, they will also be found in other areas. Rondônia is a potential offer of good investments due to research, of course research that is done correctly. We are here with our arms wide open in need of investors and research, and those that do successful research end up getting ahead.