Economic Growth of Espirito Santo: Exclusive Interview with State Secretary for Development

Interview with Márcio Félix, Espirito Santo’s Secretary for Development

Could you introduce to us the main projects and goals of your Secretariat?

Espírito Santo’s State Secretariat for Development handles two fronts. First it aims at attracting private investment to the State, both Brazilian and foreign, and also to increase our economy’s competitiveness in the traditional sectors, the ones already established here. We have an investment portfolio that goes over 100 billion reais until 2016 and in that portfolio, if we take out the public investments; we have about 85 billion reais applied to about 120 projects that are directly managed by the Secretariat for Development.

Our economy is organized in 20 sectors, the traditional State’s economy, and we work on the competitiveness of each of those sectors. For example, we are the 6th State when it comes to furniture making. We are the biggest exporter of dimension stones, like granite and marble. That sector is very strong. But we also have a coffee sector, a fruits and juices sector, there’s a big juice production unit here, one of the biggest in the world. So we have investments in all areas, but we focus the investment in oil and gas, steel, cellulose and all the infrastructures and sectors that relate directly to that.

Brazil is living a very good moment, and so is Espírito Santo, to attract companies from the motor sector, there’s a new wave of companies throughout the world, and Brazil is a big market. Brazil has a protection policy when it comes to oil, like many other countries do. It’s still voluntary, but it’s almost like an unspoken rule. There are lots of infrastructures to be built, for a population of over 190 million inhabitants.

Espírito Santo is to Brazil what Singapore is to Southeast Asia, or what the Netherlands are to Europe. We have a very favorable geographical position, in a 1.000 km radius from our capital Vitoria, we reach 2/3 of the Brazilian GDP. That puts us in a very good position in what concerns foreign business. And the fact that we are door to the mines in Minas Gerais – the iron mines – is important. They started with gold, but it’s the iron mining that grew a lot lately. That’s why steel working is very strong in Espírito Santo. Due to the fact that Minas Gerais has no coast line, we serve as the doorway to a very big portion of the Brazilian economy; most of what Brazil exports and imports comes in through us.

You spoke about how the auto sector is one of the country’s objectives, but what is Espírito Santo’s goal?

Our State has 3,5 million inhabitants, half of them live in the metropolitan area of Vitoria, the other half is scattered around the rest of the State. We have a 46.000 km2, a bit bigger than the Netherlands. Our goal is to make our economy as balanced as possible, which means that we work to make sure that every region has the investments that suit it, that can keep the economy going, and that make people stay. There’s a network of technical schools and universities, not only State funded, but also some private ones. So we work to have companies working here, which bring benefits to the population. Because we have oil, steel working and cellulose, not to mention a very strong stone sector, we ended up developing a metal working sector, which became very strong. We have qualified workers to deal, for example, with the auto industry, that we see as a complement to our economy. We don’t want businesses here just for the sake of having them, we’re looking for those who can guaranty the sustainability of our own economy, and for that we need diversity, just like we see in nature. The more diverse and decentralized is our economy, the less affected it will be by the international market swings.

Espírito Santo has grown above Brazil’s average, for examples, last year Brazil grew 2,7% while we grew the same as China, 9,2%. In 2010, Brazil grew a lot, 7,5%, but we grew even more, more than even China, 12,5%. Looking at the statistics, with Rio+20, and the letter, the document for the poverty alleviation, Espírito Santo is one of the first States in Brazil where no one lives below the living wage. In the next years, we will have a series of challenges, but we have fair fewer contrasts than other regions of Brazil. Our population is made of emigrants, 2/3 are descendants of the Italian emigrants of the XIX century, about 8% are of German descent and that gives us some special characteristics. Those were people that came here in a time of need and built companies that are still around, they are extremely hardworking and that’s what makes us stand out from the rest.

The way you describe the State, as very diverse, where poverty is well under control, sounds idyllic. But what are the challenges? What projects or what sort of foreign investments can help?

We’ve been getting lots of investments in the ports area, which means that there has been a big contribution in the infrastructures needed for oil, gas, metal working and cellulose. Sometimes one single company can attend to several of these sectors, but the exploration can exist in very remote and distant places. Here in Espírito Santo, the supplies become more competitive because they can easily reach all the big clients, be it in oil, steel working or cellulose. And there’s also the stone quarry exploration and metal working that are demanding more services too. And when you join all these different technologies, you create a more competitive environment instead of them all being isolated. So Espírito Santo has this innovation culture due to the presence of such big industries, which are usually isolated, in such a small space. In here, they trade ideas and knowledge amongst themselves.

It’s a well-known fact that there has to be a lot of effort made in Espírito Santo at the transport infrastructures level, be it roads or ports. What are the plans for that? What challenged do you foresee?

In Brazil, and of course in Espírito Santo, there are big challenges in education, security, innovation, science and technology, as well as infrastructures. So there’s a hard part and a soft part. We are growing and we need to invest in urbane mobility, in new transport solutions, but at the same time we have to be creative and create new urban areas and centralize, use more information technologies, so that instead of people having to come to work, they can work from a distance, have remote worker and develop smarter ways of dealing with that and transform all these economies we have in a knowledge economy in the future.

It’s all about sectors, and these sectors are temporary. They can last for decades, even centuries, but knowledge, that’s forever. So we need to make that change, but we also have other business opportunities, in tourism for example. We have beautiful places very near the big market, we are very close to the majority of the Brazilian population, but these places are still unexplored. We need resorts, we need convention center, we need hotels, several kinds of investments are needed and some are more easily done by foreign companies.

In Espírito Santo, we say that we are the most global of all the States, because we export, we produce to a very big number of countries. And many of the companies, in steel working or cellulose for example, are global, they trade with several countries. Espírito Santo is the doorway for several products into the country, so we have that connection with the international market. The foreigner is always welcome in Brazil, the Brazilian people are made of several waves of emigrants and we are living in another migrating moment, where people are coming to Brazil, including Espírito Santo.

Your goal is to bring projects that contribute to the sustainable development of the State. But don’t you feel that, whenever you go to other countries, you have to explain who you are, what is Espírito Santo, after all it is not the most well-known Brazilian State. Do you think there is a difference between what Espírito Santo is and what people know about it?

Espírito Santo is a small State, both in area and in population. And it is also surrounded by giants like Rio de Janeiro, Minas Gerais and Bahia, and because it is in the Southeastern region, São Paulo is also close-by, so these States end up being more well known. Espírito Santo is the unknown Brazil, it’s a Brazil that is developing rapidly, not a borderline Brazil, like some other States, filled with opportunities. But the one who goes to those States will give up his life, 20 or 30 year in exchange for a better future. Here, we are already in that better future, and we are only a small flight away from all the big centers, like São Paulo, Belo Horizonte, and Brasília.

We are where all the big riches are in Brazil. For example, Espírito Santo is already producing Pre-Salt, we’re the northern doorway to Pre-Salt. That means that to those who provide goods and services to the oil industry, Espírito Santo offers you a great advantage.

What do you think Espírito Santo will be like in 2-3 years, what are you dreams?

Well, if we want to talk about the future, we have to look at the past and see what it was like. I usually tell people that those who bet against the future usually lose. Because if we look at an old photo of our region, of big Vitoria, we will only see a great big open space. No one wanted to build here, well some people did, but most didn’t. And that window of opportunity doesn’t stay open forever. You see a new Brazil, with all these riches I mentioned, and Espírito Santo is an opportunity that is being taken very quietly. That’s the difference. Rio de Janeiro, São Paulo, Minas, they have a lot of noise, a lot of fireworks… In here we are quieter. So there’s room, and in Espírito Santo we would like to keep that. In here we are people, not numbers, and we want to keep that as it is.

Our main challenge is to grow and still keep that quality of life. We have small cities, we don’t have one single giant city. We are a group of cities of 300-400 thousand inhabitants, we don’t have a megalopolis. We want to keep the human aspect, respecting the environment, with projects that support sustainable development, which means we want projects that have a high value and economic legacy too, but that also help with the social challenges we are facing and to keep our natural resources. For example, we have the biggest area of Atlantic forest in the country. We have the 3rd highest mountain in the country, and an island that is about 1.300 km from here, called Trindade. It’s easily as beautiful as Fernando de Noronha, but it’s still untouched because it is so hard to get there. We have several riches here, out for the taking. You just have to come and choose.

Do you want to leave a message to the investor?

Like our Governor likes to say, the investor deserves the red carpet and a musical band. You will be received with a party, with joy. The investor will feel at home. Those who are born in Espírito Santo are called capixaba, an indigenous name, given to the native of Vitoria. The foreigner, when he comes here, becomes a capixaba.