Page 42: of Maritime Logistics Professional Magazine (Q1 2011)

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42 Maritime Professional 1Q 2011 an ambitious local content policy tar- gets job creation and raising the quality of the domestic workforce in both the

Oil & Gas and maritime industries.

For foreign investors, it is important to note that policy changes apply only from the 11th bidding round onwards and that preceding concession contracts are being scrupulously respected.

Current international investors in

Brazil’s energy and maritime sectors – or those contemplating such a move – would no doubt prefer that there were no policy changes. At the same time,

Brazil appears to be applying these changes in a responsible and transpar- ent manner.

Not quite removed from the regional turmoil, Brazil has its own share of problems. Lurking just under the veneer of the new prosperity are the familiar issues of significant levels of poverty, high illiteracy rates among the poor, corruption and a robust crime rate.

Unlike its neighbors, however, Brazil stands out comparatively as an econom- ically stable country, while developing a strong democratic culture that main- tains its independence from foreign influence. Bolstering the stable political climate is a projection of oil and gas reserves that are expected to surpass 150 billion barrels of oil equivalent (boe) by 2020, mainly thanks to deep- water pre-salt finds but also influenced by an increasing number of shallow water discoveries in this year alone, along with important onshore gas finds.

GETTING STARTED

Foreign embassies in Brazil usually have some form of commercial office specializing in helping firms from their countries to start-up in Brazil. Notable examples are Innovation Norway and the US Commercial Service. Doing business in Brazil is not without its roadblocks. Arguably, it will soon become the model from which other regional players will have to draw their playbooks from as they try to draw jilt- ed investors back to the table.

In Brazil, energy companies are over- seen by the Agência Nacional de

Petroleo (ANP) – consisting of the

National Petroleum Agency and the

Organização Nacional do Petroleo (Onip) – whereas shipping companies are regulated by the Agência Nacional de Transportes Aquaviários (ANTAQ).

ANTAQ includes the National

Maritime Transport Agency, the

Brazilian Transport Ministry, the

Brazilian Navy and Port authorities.

Foreign companies are required to operate with a bank accredited by the

Brazilian financial system and all trans- actions are scrutinized by the Banco

Central.

When opening a firm in Brazil, it is compulsory to have a Brazilian director and foreign companies are required to have local offices. Local accountants will ensure compliance with all tax and reporting procedures. Failure to do so can result in heavy fines. As with most places, policies for onshore and off- shore staff apply and expatriate staff must obtain work visas.

A strong local presence for foreign outfits is important here. In most case, the practice of establishing partnerships with local entities can make the process run faster than if you do it by yourself.

Depending on the nature of the busi- ness, local rules may allow for various incentives to investors, such as lower taxes. In this way, a reputable local legal consultancy – such as the Karl

Kincaid representative in Brazil – can be vital. These legal consultancy groups necessarily specialize in Energy and

Shipping in order to provide full sup- port in all facets of these markets. It may be easier to get this all support from one law consultant but this is not always feasible.

For companies that do not wish to immediately enter the market, the best solution may be to partner with a

Brazilian company to represent and legally market products and services in the country. The local company then handles all legal and taxation proce- dures while the foreign entity can choose between running the business remotely from elsewhere, or converse- ly, agreeing to have the local partner handle day-to-day business matters.

This option may be attractive to those wishing to dip their toes into the water as they navigate the local business cli- mate, without actually incurring heav- ier infrastructure startup costs.

UP & RUNNING: HOW & WHY

New entries to Brazil’s marketplace have more than one option. Here, “one size does not necessarily fit all.” For

HATLAPA, a mature (90+ years) marine equipment manufacturer head- quartered in Germany, the partnership path was the way to go. Already well known in the global offshore industry and looking to enter the thriving

Brazilian markets, HATLAPA chose

Tridente, a Brazilian company with similar products and 35 years of local business ties. Tridente’s long experi- ence in the marine and offshore sectors made it the natural choice. "Tridente’s well-established relation- ships in the Brazilian market are a great asset for HATLAPA as a global busi- ness and will strengthen our position in both marine and offshore markets", explains HATLAPA’s Offshore Sales

Manager, Uwe Nickschat.

Tridente’s multiple office locations and assembly area in São Gonçalo –

EMERGING MARKETS

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Maritime Logistics Professional magazine is published six times annually.