Economic Development in Alagoas: Exclusive Interview with Secretary Luiz Otávio Gomes

Interview with Luiz Otávio Gomes Silva, State Secretary of Economic Development and Planning

What are the strategic projects for Alagoas? What is the main focus of the State?

Today the government of Alagoas knows exactly what is going on in the State in terms of investment and business. This excellent organisation is very attractive to foreign investors and businesses.

In order to encourage foreign investors to come to Alagoas and Brazil, some conditions need to be met. There is always the question of public security, principally in Rio de Janeiro and São Paulo. Sometimes foreigners don’t want to come because they have a distorted vision and they believe Brazil is very dangerous. If we can guarantee here in Alagoas secure legal rights, fast bureaucratic processes, public security and good education, businessmen who invest here will see that it’s a good place to work and live.

Statistics show that Alagoas is the most violent State of Brazil. The education level is poor; the average is just 5 years of schooling per person. What can you say about this?

You can walk at any time of day or night on any road of Maceió, the capital of Alagoas, and you won’t have a problem. There are very poor neighbourhoods, it’s true. In these areas there are problems with drugs; the violence and killing is among those people. But it’s totally localised. It’s like in the favelas of Rio de Janeiro. Here in Alagoas we know where the violence is happening and unfortunately it happens in the poorest neighbourhoods, where the people find it very difficult to get out of these areas and out of their economic problems. That is why the Governor has social projects for education health and public security. Sometimes the statistics are unhelpful. The truth is there are a lot of murders in two cities of Alagoas; Arapiraca in the interior of the State, which is the second largest city, and also in Maceió, but only on the periphery. The murders are unfortunately linked to the youth who are trafficking drugs. This can be easily proven.

In terms of education, we have had a bad Ideb result. Ideb is the Brazilian Education Quality Index. However again, this is localised in just some cities, and thus it evidently distorts this statistic. For example: Coruripe in Alagoas has one of the best Ideb scores in Brazil and Maceió has an excellent level of education in some areas. These statistics are so general that they are misleading.

So why should you invest in Alagoas, and why has the government over the last 6 years seen the introduction of 65 new industrial businesses? Among these businesses of large economic importance, Braskem has more than one industrial factory. Braskem is the largest petro chemical company of Latin America and is the 6th largest in the world. Braskem invested $600 million here in Alagoas in a PVC plant; transforming Alagoas into the largest producer of PVC and MVC in all of Latin America. Why does Braskem still continue to invest in Maceió with a Chloro-Soda industrial plant? It does so because Alagoas is a great place to invest. Today our State is the largest producer of chloro-soda, PVC and MVC in Latin America. Over the last 6 years we have consolidated the chemical plastic industry i.e. 3rd and 4th generation plastics. From the raw material which is used by Braskem, we have focused the industry further with NTPlas (the Technological Nucleus of Plastics) which capacitates and prepares the workforce to work in this industry. This has made Alagoas a shining example for Brazil and the principal north eastern State in plastics. Any businessman who wants to invest in this field can find all the right conditions for their business to be a success. This is one of our areas of development: the productive chain of the plastics industry.

Another point, we are developing the multisector industrial estate called Polo Multisetorial Luiz Cavalcante. It has become a centre for industry, commerce and services. This industrial estate is for medium and small businesses and it is located near the port, 10 or 12km from the centre of the city.

Is there still space for investment in this industrial estate? Is it independent? Is there a President who is working to bring in new businesses?

Yes, there is space for investment. It has support from the government of Alagoas, from the planning and economic development secretaries. It has areas that are available for the general market and others for the government. There is an association which is the AEDIC; the Association of businesses in the industrial sector of Luiz Cavalcante. The President of the association is Gilvan Leite. All the coordination is done by this association, the State government and us, at the Department of Economic Development and Planning.

We also have another industrial estate which is the Pólo Multifabril Industrial José Aprígio Vilela which is focused on the plastics and chemical industry. It is where the PVC plastics of Braskem and all the related industries are located. It also has its own association, and originally occupied an area of 1 million m² which belongs to the State government, now it has been extended to 2 million m². We are also placing other economic activities there, such as a cement factory and businesses in the ceramic industry as well as others in the metal mechanic industry. This industrial estate is an excellent example for all of Brazil.

Apart from those two industrial estates, one in the city of Maceió and the other one in Marechal Deodoro, which is 12km from the port of Maceió, we are bringing development and industrialisation to many cities in Alagoas. We have built an estate in Arapiraca which is focused on the construction industry. Palmeira dos Indios, which is the 4th most important city in the State, has a multisector industrial centre also with a focus on construction. We are bringing a fabrics centre to the north of the bay where we are placing 400 clothes makers so that they can produce clothes on an industrial scale. This industry will strengthen their dispatches, their working conditions, employment etc. with supervision and training.

All this is happening in the State of Alagoas in terms of development and industrialisation. Another important area of development is the sugar energy sector. Energy from ethanol made from sugar and biomass. This sector is growing, with its own unions and it is becoming a very important industry. We have some industrial units here in Alagoas producing energy from biomass but now we are hoping to innovate the industry. In the municipality of Teotonio Vilela, the dry pulp of sugar cane is used to make energy for exportation. This industry has an investment of $100 million and is beginning to grow now. Alagoas is at the head of the energy from bio mass industry. We export energy to the rest of the country, we sell it on the free market and it can go to any State or city of Brazil, via energy transport lines all over the country. Furthermore, Alagoas is involved in a revolutionary new technology that makes second generation ethanol. First generation ethanol is produced from sugarcane but now we are producing ethanol of second generation from the dry pulp and from the leaves of the cane: all material which used to be burnt or thrown away. This is the 2nd industrial plant of this 2nd generation ethanol in the world; the first is being built in Italy and the 2nd here in Alagoas in São Miguel dos Campos. $160 million from the Graal Bio group has been invested, it is fantastic. This is the second area of development in Alagoas.

The third area of development is tourism. Alagoas is being transformed. The highlights are the seas, the beaches and the lagoons. So the State government is developing this area, building houses and highways, training and preparing the workforce to welcome tourism, not only leisure tourism but business tourism. We have built 30 to 32 hotels which are really transforming Alagoas, mainly in the capital of Maceió, which is the best capital in terms of high quality hotel rooms in the whole of the Northeast, even more so than Recife, Fortaleza and Salvador.

The fourth area of development is the naval sector. Today, Alagoas is working on consolidating its naval industry. We are installing a shipyard to repair ships and build offshore platforms to work in the open sea. Due to a coral reef we have had to change the original location, but in March or April 2013 we will begin to open the shipyard which will be the most modern in Brazil. It will include 3 industrial plants. Alongside this shipyard we are starting an industry which will build equipment for ships. This industry which mainly used to be centred in São Paulo is being introduced here ($60 million of investment). We have built equipment for Petrobras, for example much of the equipment for the refinery Abreu e Lima in Pernambuco in Suape were built in the factory in Marechal Deodoro in the State of Alagoas. The industry acquired an area of 27,000 m² in the port of Maceió. They have also set up an industrial plant in Coruripe, next to the shipyard, investing $150 million. A contract with Petrobras has been signed for $600 million to build equipment for pre-salt offshore development and they have acquired an area in the port of Maceió.

The fifth and last area of development is the Canal into the interior. A project first developed in 1990 and after many studies taking place between 1991 and now, the Government of Teotonio Vilela has signed the paperwork. In the last few years we have built 70 km of canal and by the end of this Government’s period, in 2014, we hope to have 240km. The first phase has been inaugurated with irrigation perimeters. The Brazilian company Codevasf is responsible for the irrigation of the Northeast and is part of the Ministry for National Integration. In fact the company is responsible for the irrigation policy of the whole of Brazil. We are going to work with them so that people can stay on their land and have drinking water and water for their livestock. When this is all built, it will end the drought here in Alagoas. The semi-arid area of Alagoas will have a solution and we will have all the conditions for Alagoas to be a State where you can invest happily.

I finish my speech with the following: what are the advantages in investing in Alagoas? Firstly, you will have the Secretary of Economic Development at your disposition. We always assign a manager to each project that will be at the investor’s disposition 24 hours a day, for all their needs. The idea is to invest in the State, generate jobs, income and taxes. Secondly, you can talk at any hour to the Secretary of Economic Development. Also, I invite you talk to the Governor as many times as you need to. So, it is easy to do things in Alagoas and we are preparing not just the infrastructure of the State by creating industrial parks, but we are also creating conditions for a company to be able to open in Alagoas in 72 hours. In just three working days you can open your business.

In terms of foreign businesses who want to invest here, are there sectors that are prioritised?

We invite all sectors. I have not mentioned it yet but in Alagoas the main industry is products made from coconut. The headquarters of Sococo are in Maceió and they are one of the largest producers of this kind of product in Brazil. Bauducco is one of the largest biscuit and pannetone companies in the country; and their largest factory is being built here in Alagoas. The owners are Italian but they have lived in Brazil for many years. They have 3 factories; one in Guarulhos and one in Minas Gerais, and now there will be one in the Northeast of Brazil, in Alagoas. In February they inaugurated the first phase of this factory which will be the largest in Brazil. In terms of food products, we have 2 big factories that are leaders in their industries. So if someone wants to start a large food production industry, they are welcome in Alagoas.

We are closing on a deal with Portobello which is in the ceramic industry, so that it can expand in Alagoas in an area of 1 million m². Cesar Gomes Junior, the President of the company, was completely impressed with Alagoas. He has already opened a factory here and he was so impressed because he opened it in 48 hours.

What are the great challenges still to come for the next couple of years for the State?

I think the biggest challenges here in Alagoas and in all the other States in Brazil are the infrastructure and logistics. Governor Teotonio Vilela is working really hard in this area, doubling the highways and reducing the time it takes to travel between the cities. There is good news; we are making the BR 101 dual carriage and it will be finished by 2015 at the latest. We are also working with Pernambuco to expand the coastal road in the northern direction linking Pernambuco with Alagoas. This should happen over the next 4 or 5 years. The federal government is working with us and with the northern States to build a railway from Salvador, stopping in Aracaju, Maceió and Recife. This railway will be for cargo and passengers. It will allow for huge development. If I have cargo here in Maceió, it will go to Suape and then go towards the Northeast, leaving Pernambuco and passing through Ceará and Maranhão and it will arrive in Piauí. So I can have my merchandise in Piauí. Along with this, the railway that links the bay of Salvador to Rio de Janeiro is being recuperated which will benefit the whole area.

The great challenge over the next 10 years for Alagoas – for the next two governments – is to ensure continuity for all the planning that we are currently doing. Today we have a plan for the next 10 years which if the next Governor were to oppose, all our work would go to waste. We have been working not just for the government but for the whole State. Alagoas is developing and moving forward. More than ever we can be sure that it can only continue to grow.