North Brazil: Economic and Social Development in Rondônia

Interview with Emerson Castro, State Secretary for Economic and Social Development (SEDES)

Let’s start with a brief presentation of SEDES. What is the role of the department and what are its areas of actuation?

This department has changed its focus somewhat; it used to act in a joint venture with the city halls, dealing mostly with urban cleaning and road surfacing. There were some projects with fish and cattle breeding, and also agriculture.

Today we have a much wider scope, working in areas that are directly linked to economic development such as industrialisation and adding technology to our primary production. We are also dealing with the question of land regularisation in the state of Rondônia which is directly linked to development, particularly in terms of access to credit. We have implemented the regularisation of the land area; of the urban and rural properties. We have created opportunities for entrepreneurs, traders, producers and small scale producers by increasing access to credit via development agencies and banks such as Banco de Amazonia, Caixa Econômica and Banco do Brasil. Alongside this, we are actively searching for new markets in which to sell our products, we are looking to create joint ventures with important players who will invest in our state. As we are a young state, we are still developing our local businesses, we are currently centred on commodities, so we have to use technology in our production in order to be able to export products with added value.

We are opening new markets, searching for joint public and private partnerships (PPPs) and constructing an infrastructure network necessary to support this development. These are the main areas that the government and our department are focusing efforts on to increase economic development.

What are the strategic projects for the state of Rondônia at the moment?

In terms of infrastructure, the main project we are working on is the construction and installation of a new public port and within this port structure we are going to install an Export Processing Zone. We are also looking for investors and investment to increase our export possibilities. We are opening a new area for limestone exploration. Our government has always had and still has strong concerns about the environment and so this limestone production area is going to allow us to improve and maximise production without deforestation and actually recuperating some areas and stimulating small and medium producers. The port is essential for us to be able to increase our capabilities and to bring in private investment. We have seen growing demand in the Asian market for our commodities, but we must add technology to benefit these products particularly soy, maize, rice, minerals and wood. To be able to have private investment we need to have cheaper alternatives for production distribution. We don’t have a lot of consumer markets close to us for our industrial production. Our population is just one to one and a half million, we have Mato Grosso do Sul next to us and Amazonia which have low population densities, therefore we need infrastructure: roads, highways and ports. The port is essential. The current port is 60,000 m2, the new public port will be 1 million m2 and with the possibility of expansion. Within the public port we will have 259 hectares for the Export Processing Zone which is approximately 2 million 600 thousand m2.

So the EPZ is a new project and a new centre for the country’s industrialisation process and Rondônia, particularly the city of Porto Velho was chosen for this. In this zone, industries will set up and benefit from a series of distribution incentives from the unions and the state to export this production. 20% of our production goes to the internal market and pays taxes like any other company; however the production that is exported will not pay these taxes. Therefore through this port and the Madeira River, with the dredging that has been planned by the federal government we can export this production. Even in the dry season we can get to the Atlantic and reach markets not only in the north east but also in other countries. We also have links to the Pacific through Peru and Bolivia. This trans-pacific highway is nearly finished and will enable us to reach the Asian markets without passing through the Panama Canal, reducing time and costs as the canal is very expensive to use.

We will have the all the conditions necessary to be able to access the largest market in the world. We will be able to export our commodities and also eventually the processed goods that we hope to begin producing in our state such as tractors, cars and farming tools among other proposed investments.

Apart from infrastructure what are the main challenges for the state of Rondônia and your department?

The main challenges that the Governor Confúcio Moura has put forward concern all areas of the government and not just our department, but for me and my department our greatest challenge is to always defend the environmental concerns and also to ensure the right social balance in our population. This means the recuperation of powers to be able to include the citizens of Rondônia who live in poverty and some in extreme poverty. There is about 25% of the population living in poverty. We are working towards creating jobs for these people through training programs and the Bolsa Futuro program that deals with transferring income. We also have to continue looking for investors who can create jobs for our population. Effectively we have to make sure we are making the most of these resources.

What are the sectors or areas that offer great potential for international investors?

In Rondônia, our imports and exports grew last year by 62%. We have the prospect of a new port which will be almost 20 times the size of the current port. We have the arrival as part of the federal government’s strategic plan of a railway; the Ferro Norte. The federal government also has proposed investment plans for the recuperation and the amplification of our highways. In terms of soy production in this state, we occupy an area of 180,000 hectares. We have the conditions to occupy up to 3 and a half million hectares without cutting one single tree down. We have very strong mineral resources of tin and cassiterite. We have environmental riches and possibilities for tourism that are unique in this northern region and are similar to the Pantanal in the south. We have a region of very fertile soil in the southern cone of the state, 20% of the region’s land area produces 80% of the region’s grain. The capital city is strategically positioned close to the Madeira River, and will soon have the new port, it is connected to the Pacific, which gives the industries here good possibilities to set up and reach large world markets.

It is hard to establish just one or two lines of investment which are promising. In the improvement of grains there is definitely space to grow and in the processing of our fish. We have a network of producers that are organised in cooperatives, but we need more technology, to improve the farming production of pirarucu and tambaki which are exotic fish that the world is looking to consume. We also produce açai and regional fruits; so all these areas are open to investment. There are many opportunities because we are still at the beginning stages and need private investment. The government is investing in infrastructure, dual carriage ways, bridges for heavy loads, silos for storage so that we do not lose value of our produce. However, bringing in private initiative will substantiate an ocean of opportunities.

Rondônia is a state of opportunities and euphoria. We are welcoming investors, supporting the installation of investment here with the donation of areas within industrial parks, with the idea of reducing the cost spread sheet of this internal produce whilst creating more competitiveness as we can access the largest world consumers. We are also orientating some businesses who are at the moment investigating the area, to be able to show them what the government is doing here in this state in terms of development and investment so they can have the best returns on their investments here. Rondônia still does not have an ice factory to be able to transport fish to other states. We have refrigerated trucks that come from Mato Grosso to take our fish. So that gives you an idea of all the opportunities for business and investment that our state has to offer.

What is your vision for the state over the next 2 or 3 years, what is your dream?

Our dream is to still be in office in 3 years’ time. I would like to see the port installed and inaugurated. I would like to see a marked improvement in the quality of our production and our livestock. We will see our livestock model change from being majority open air to a confined model. We need to see genetic improvement of our dairy cows; we produce a lot of dairy products and need to see improvement in these products. We want to see all these resources being transferred to social resources. So that the income generated from these resources reaches every citizen here in Rondônia and doesn’t stay in the pockets of the large businesses. This is our main mission. We want to generate jobs, dignity and increase quality of life for our citizens. We want our city halls to be able to have the resources necessary to implement these changes, to improve schools and hospitals. Our state is a state that has suffered in the past and had been perhaps overlooked by the rest of the country; we hope that it is now a good example of environmentally and socially sustainable development.

Do you have a message for investors that are going to read or watch your interview? Why should they come to Rondônia rather than to a different state? How is the state helping investors?

Our state welcomes investors. There are other areas of the country where investors arrive and they are treated as one of many, but here they are treated differently. The government is creating logistics and infrastructure specifically for these private investors, we are attending the needs of the population but the development is in view of private investors. Our state predicts a gain in the effectuation of the final costs with the tributary benefits that we offer within our development concept. We even offer areas in which to set up. Our state is strengthening its production, we are producing products that the whole world wants to consume and on a great scale. We just need to add more value to these commodities. Our state offers investors a welcoming population, a fantastic climate for agriculture; we don’t have climate or geographical problems. We are effectively a great state for planting, harvesting and breeding livestock, and generating income for everyone not just the state, and especially for those who believe in the development of this state.

Would you like to comment on tourism?

I think we can invite investors not only to do business here but also to visit and travel.

What are the main tourist attractions?

We offer cultural tourism. We have a very famous festival here in July that is the Festival of the Holy Ghost, there is the festival of the frontier duel in Guajará-Mirim and the festival of Boi Bumbá. Other than this we are also developing an area of Duty Free Shopping in Guajará-Mirim that is being legislated currently. We are orientating many local companies in this area; it will also bring in lots of tourism into this area. We have an extraordinarily beautiful natural resource that is the Guapore Valley with the 500 year old Fort of Prince of Beira. We have business tourism in the capital city, Cacoal and Ji-Paraná. Therefore we can have investment in restaurants and hotels. We have lots of tourism coming in for fishing. Fishing tourism comes only after safari in terms of the money that it generates as it is an expensive sport. These tourists must employ drivers, guides, hire boats, etc. It is an area of tourism that can grow; we have structures being installed, with good quality hotels to attend this kind of tourism. I would recommend investors to come and study this market over a couple of days to see what we have to offer in terms of leisure, attractions, natural beauty and culture.

I have worked 23 years in hotels but now I am dedicated to working for this department. I am passionate about tourism; I know that we have so much to offer not only to national tourists but also international tourists. 18 years ago I used to welcome a group of about 40 German and Swiss tourists who used to come to my hotel three times a year just to take photos of the Madeira-Mamoré railway, they didn’t do anything but take photos! At that time I realised that the railway within our state’s natural beauty had so much potential. It was the most visited railway. There is even a fan club for this railway that I didn’t know about; people from Germany know about something here that even the locals don’t know about! I travelled around this state to really get to know it. There is a river with black water that looks like coca cola, but when you have it in your hands it is clear and clean. The water is black because of its acidity; there are no mosquitoes there because the mosquito eggs can’t survive. So I see a lot of potential for large luxury hotels in the Guapore Valley. Here in the Apertado Valley, there are rivers with rocks and pools that are so beautiful. There is Ouro Preto and Espigão; you can do paragliding hand-gliding and skydiving. Here in the lakes we are going to do investigations to see if we can begin to offer water sports in these immense lakes. We want to see if we can build hotels and restaurants etc. I get excited because this is the reality, it isn’t a dream it’s a fact. It’s here, it’s being built we just need to show the world.