The agency, led by Ricardo Cappelli, is also partnering with regulatory agencies to simplify project approval processes
A ABDI (Brazilian Industrial Development Agency) is preparing a set of metrics to measure the effectiveness of the NIB (New Industry Brazil) measures. The program was launched in January by the vice president Geraldo Alckmin (PSB) and will receive an update in August.
“At ABDI, we are collecting data from Finep, Embrapii and BNDES, the financiers. We are integrating the numbers to begin making an assessment of the impact of credit on the Brazilian economy. With this, we will be able to assess whether it has generated densification of production chains, whether it is reaching strategic sectors and how much private investment it has generated.“, he said to Poder360 the president of the agency, Ricardo Cappelli.
Watch the interview with Cappelli (29m22s):
The measures are expected to be presented in August. They will begin with R$300 billion in credit lines for the sector.
Cappelli said he is negotiating contributions from Banco do Nordeste to the NIB. According to him, the president of the entity, Paulo Câmara, has already agreed to put “a few tens of billions”. The focus will be on micro and small businesses. The announcement is also expected to be made in August.
Another focus of the agency’s work is to simplify regulatory processes. It has already entered into a partnership with ANM (National Mining Agency) and is about to conclude negotiations with the Anvisa (National Health Surveillance Agency) and with the Ibama. With this, it intends to release more than R$400 billion in private investments.
“Ibama had 6,000 employees. Today, it has 2,000. That’s too few. There are 73 systems operating internally and none of them communicate with each other. We don’t have the fiscal space to hire 4,000, but we can act intelligently. We’re going to restructure and integrate the systems and use artificial intelligence to analyze the processes. It won’t replace the technician, but it will do the bureaucratic work.”he said, citing environmental licenses.
Cappelli echoed the president’s government Luiz Inácio Lula da Silva (PT) and criticized the interest rate in the country. According to him, the debate on cutting spending necessarily has to involve reducing interest rates.
“Brazil will pay R$760 billion in debt service this year. For every point that interest rates fall, we save more than R$70 billion. Why not lower them?“, he said.
Read excerpts from the interview:
Poder360 – ABDI is creating criteria for monitoring NIB. How will it be done?
Ricardo Cappelli – The NIB is a very broad policy. It involves a set of initiatives, such as the P+P (Plano + Produção), which has around R$300 billion available at BNDES, Finep and Embrapii. I was recently at Banco do Nordeste with president Paulo Câmara. The bank is also joining the effort.
What will be Banco do Nordeste’s contribution to the NIB?
They are formulating the entry into the process. But it will be in the tens of billions, focused on micro, small and medium-sized companies.
What about the rest of the plan?
P+P offers market interest rates. For innovation, they are lower. There are a set of initiatives such as Mover, with an investment of R$19.8 billion in R&D (Research and Development) in the automotive industry until 2028, aiming at the energy transition. As a result, Anfavea announced investments of R$130 billion. There is accelerated depreciation, with more than R$3.8 billion for machinery renewal. The average age of Brazilian industrial machinery is 14 years. With technology, the park is being renewed quickly, modernizing the industry and bringing more productivity. It also mobilizes the national machinery and equipment industry. And we made adjustments to import tariff policies, such as steel.
Which went from 9% to 25%.
It was a very precise adjustment made in dialogue with the industry so as not to have a negative effect on the chain that depends on steel. It led the steel industry to announce an investment of R$128 billion in the expansion of its industrial park. And we also created the LCD (Development Credit Letter), which is an industrial version of the LCI (Real Estate Credit Letter) and the LCA (Agricultural Credit Letter). That’s another R$10 billion.
What about small and medium-sized companies?
There is also B+P (Brazil + Productive), which provides resources for 200,000 micro, small and medium-sized companies. There are 93,000 in-person consultations focused on digitalization and increasing productivity with Senai and Sebrae.
And what is ABDI’s role in this process?
The MDIC will establish new targets for the NIB in August. At ABDI, we are collecting data from Finep, Embrapii and BNDES, the financiers. We are integrating the numbers to begin assessing the impact of credit on the Brazilian economy. With this, we will be able to assess whether it has generated densification of production chains and whether it is reaching strategic sectors. We will be able to determine which sectors are not seeking financing and understand why. We are building this intelligence analysis. We will start with P+P, of R$300 billion. Later, we will include the other policies. This monitoring serves to validate whether the policy is correct and generating results.
It’s not something common in Brazil.
No. We need to measure results. A January report from the IMF brings data from their industrial observatory. They detected 2,500 new industrial policies in the world last year alone, 48% of them in China, the US and the EU, impacting 71% of global trade through 3 central vectors.
Which?
The first is that the pandemic has made it clear that there are gaps in the supply chain, with very large dependencies on some countries. There is a search for balance. The second is the need for energy transition. Look at what happened in Rio Grande do Sul. It is unacceptable that we continue to release polluting gases into the atmosphere, raising temperatures and generating extreme weather events. The third is the growing geopolitical tensions. We see the war in Ukraine and the impact on European industry, especially in Germany, with Russia closing off gas in response to sanctions. Industrial policy is aggressive. In Brazil, we are talking about credit of R$300 billion. The United States is putting up US$1.9 trillion, the European Union US$1.7 trillion and Japan US$1.5 trillion. Much of it is non-refundable resources. For example: Intel’s new factory will cost US$100 billion. The US government will put up US$30 billion non-refundable. It is a reorganization and a dispute over new plants.
But Brazil is investing much less. Is there fiscal space to expand?
In monitoring [da ABDI] We are trying to quantify it in two ways: by direct impact and by generating private investment as a result. A country with the conditions of Brazil cannot make a leap in development with the public budget alone. For this, the private sector is essential. There are key issues for this stimulus. Now, we need to overcome possible regulatory bottlenecks. For example: Vale alone has investments of R$350 billion awaiting analysis of 77 licenses at Ibama. ANM (National Mining Agency) has 215,000 processes in the queue, 21,000 of which are requests for research and mining. There is a regulatory bottleneck and we need to speed up these processes.
How to do this?
We signed a technical cooperation agreement with ANM and we will sign one with Ibama and Anvisa. Ibama had 6,000 employees. Today, it has 2,000. That is very little. There are 73 systems operating internally and none of them communicate with each other. We do not have the fiscal space to hire 4,000, but we can act intelligently. We will restructure and integrate the systems and use artificial intelligence to analyze the processes. It will not replace the technician, but it will do the bureaucratic work. Issues that take hours can take minutes or seconds with artificial intelligence. We will also model and analyze the process flow. And we need to reevaluate the regulations. In the federal government alone, we have 136 regulatory agencies or commissions that issue an average of 900 new regulations per day. It is impossible to develop the industry with such a regulatory madhouse.
What is the cost of these partnerships?
This part doesn’t depend much on money. It’s operational, management. Of course there’s some money to hire software, for example. But the big issue is the political decision, which was made. But there’s another issue that needs to be discussed here that’s fundamental.
Which?
Interest. There is no technical justification for the current level [de 10,5%]. Brazil has the second highest interest rate on the planet. It is 6% real interest. There are countries in the world with negative interest rates. Brazil has inflation at target, the lowest unemployment rate in 12 years, and US$350 billion in reserves that protect us against external shocks. We have a deficit, but tell me which country in the world is working with a zero deficit or surplus at this moment? I see a lot of people saying that they need to make fiscal adjustments. Everyone advocates adjustments. President Lula has said that he learned from Dona Lindu (his mother) that he cannot spend more than he earns.
But in a recent interview he said he was not convinced the cut was necessary.
The question here is what to cut? From where? We need to debate this with society. In recent weeks, I have heard people advocating de-indexing BPC funds from the minimum wage, which focuses on retirees and people with disabilities. Is that justified? We have R$650 billion in tax relief for large sectors. Are we going to reduce that? Brazil will pay R$760 billion in debt service this year. With each point that interest rates fall, we save more than R$70 billion. Why not lower them?
But there are areas that spend too much or spend poorly. There is room for cuts.
Minister Fernando Haddad (Finance) has been working hard to increase the efficiency of the public sector. The key issue is the quality of spending, not the quantity. Public spending that generates development returns as revenue to the State. The problem is waste. The effort now is to cut waste. To generate development, it is essential to discuss the dysfunctionality of the financial system. In the United States, there are 4,000 banks. No country in the world has the spread that Brazil has. We have an oligopoly of 5 or 6 banks that controls the capital market in Brazil. It is poisonous to the economy. Loan sharking has become institutionalized in Brazil. There is no way to think about industry when more money is being given to the financial market. Between 2011 and 2020, Brazil grew by an average of 0.6% per year. This is the greatest tragedy. In the 1980s, the lost decade, it was 1.6%. Compare that to the result of the banks. They made a killing.
Changing the subject, you were in charge of security in the Federal District after January 8th. Was your objective achieved?
I received a plane that had a serious breakdown, was full and was falling. My goal was to stabilize the plane, land it smoothly and with everyone alive. That’s what we did in 23 days, combining firmness and balance.
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