ZPE Parnaíba: Emerging Export Processing Zone in Brazil

Interview with Mirocles Campos Veras Neto, President of ZPE Parnaíba (Export Processing Zone)

Brazil has difficulties with bureaucracy, red tape, a complicated tax system, etc. What is, in your opinion, the overview of this regulation system and how is ZPE Parnaíba – Export Processing Zone simplifying the system?

Export Processing Zones have their own regulation, and it makes all that bureaucratic, and tax question easier. Companies installed in EPZs have more advantages than other companies in Brazil, in what concerns the external market.

What kind of advantages are we talking about?

There are several advantages inside the customs area. There are some taxes which are not applied, change facilities and there is the advantage of the speeding up of the export, which gets out of the EPZ already bonded. It goes to the airport or to the harbour with all the necessary paperwork.

What about the country’s legilsation?

ZPE Parnaíba’s biggest shareholder is the State Government and it sees the EPZ as a development inducer for the Piauí State. ZPE Parnaíba has several advantages in what concerns areas allocation and internal rates, which are below the market, to consolidate the companies that want to settle there and to have the greatest number of companies installed in the EPZ.

ZPE Parnaíba is an instrument to make Brazilian products competitive in the world market. I can only be competitive if I don’t have a high burden of taxes. The major objective is to place what is produced in the ZPE in the external market exempt from any municipal, state or federal tax. It’s forbidden to tax inside the EPZ.

There are other export zones in Brazil, why should people come to this one?

There are 23 approved EPZs in Brazil. Our EPZ is inside the Northeast region and it’s very advanced in terms of construction. We have several advantages: logistical and also in terms of costs. Our logistic structure is very good, because we are near to the Piauí coast, 300 km from the Maranhão and the Ceará harbour, we have an international airport, making it easier to export and, inside the State Government, the Luís Correia harbour is becoming viable and it is located 12 km away from our EPZ.

The main characteristic of the EPZ is its location: we are very near to the European, the North American and the Asian market. We are 7 days away from the Miami harbour, 12 days away from the Rotterdam harbour, and 20 days away from Shanghai harbour. On the other hand, the productive base, where ZPE Parnaíba is located, is very wide: we have a wide range of local production and transformation possibilities. Those are important features when deciding to invest.

Of the two companies that already have a project in the Ministry of Economic Development, one is a fruit-growing industry and the other one is a pharmaceutical chemistry industry. These industries have the raw material locally, and that is a great advantage of this EPZ over the other ones in the country.

This particular EPZ is not targeting specific sectors. We are opened to several sectors working with our own raw material, as well as to technology industries.

The training costs of personnel are going to be high compared to Chile or Argentina. What will be your solution / response to that?

In the Parnaíba town we already have a good education structure: 3 private universities, a federal university, a state university, a federal specialization course and also the technical courses from SENAI and SEBRAE, working on the Parnaíba labor qualification. Since we have a vision of all the industrial projects that are going to be installed, we have a wide range of partners assembling, to qualify the governmental, public, municipal, state and federal partner institutions.

Compared to other Brazilian states, Piauí has a lower ranking in terms of exports. How is the Zone going to change this and make an impact on the State?

In its final project, ZPE Parnaíba is going to reach around 150 companies and industries. That will change the export framework of Piauí. And there will be several companies outside ZPE Parnaíba backing us up and industrializing our State. Previous to the EPZ project approval, we carried out studies that forecasted that with just the first 10 settled companies, we will be able to double the current 160 million dollars value of State exports.

Just yesterday we were talking to someone about biomass and he told us that Piauí’s export potential is around 3 billion dollars just in terms of biomass. Is Piauí using its full export potential? Which are the niches to be explored inside the EPZ?

Inside ZPE Parnaíba, we will place fruit-growing, honey, carnauba wax, leather, mining and soy; all products that can easily be industrialized and exported through the EPZ. These are all locally produced products that are currently industrialized outside the State due to the lack of industrialization inside Piauí. ZPE Parnaíba will contribute by exporting all the raw-material already produced in the State.

In the last 5 years the productive base of Piauí has been changing significantly. Suzano, one of the world’s biggest cellulose companies has a huge project to assemble here an industrial plant and it will generate a significant cellulose production for the international market. The Vale do Rio Doce has been investing in Piauí for several years now and it already has an operating plant here producing nickel and copper. There is also a huge opportunity to start exploring natural gas. All these are opportunities that have been worked on in the last 5 years.

Are you opened to foreign investment?

Of course we are. We are going to make an international analysis through fairs and visits to big industries so that they come and settle here. We have until July 2013 to put the functions of ZPE Parnaíba in motion and, after that, we’ll act in a stronger way in the attraction of foreign investment. Like I said before, we are sure that our rates, allocation and services inside the EPZ are going to be among the lowest in the country and that will guarantee a strong attraction of international companies that will want to settle here.

What will be the division in terms of investment?

ZPE Parnaíba is under construction. It’s an investment of 14 million Brazilian Reals of the State Government. We have been complying with the deadlines imposed by law and we’ll be in full customs operation to accommodate the industries for them to be able to initiate their activity in July 2013.

The industries that might have interest in settling in ZPE Parnaíba must come to us; they can also visit our existing website for an overview. The companies must enter a project in the EPZ and we’ll send it to the Ministry of Economic Development to be analyzed. As long as the project is analyzed and approved, the company can settle inside the EPZ. As far as the investment is concerned, it depends on the industry: there are large and medium scale industries. Any company interested in producing for the external market has a good partner in this EPZ.