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Bioeconomy may lead investments of R$ 7.15 billion and generate 218 thousand jobs in the Amazon

In a public hearing at the Special Commission that analyzes the Tax Reform – PEC 45/2019 in the Chamber of Deputies, Escolhas Institute presents proposals for tax incentives in the Manaus Free Trade Zone based on sustainable use of natural resources.

An economic development model that integrates the current vocation of the Manaus Free Trade Zone (AM) and its industrial park to technological innovation and sustainable use of Amazon’s biodiversity. Instead of subsidizing industrial production, as it currently does, the government could stimulate investments in new businesses, especially those aimed at sustainable use of local biodiversity – the bioeconomy. With just over $ 7.15 billion invested in physical infrastructure over ten years – that is, less than a third of the annual tax incentive given to the Manaus Free Trade Zone, about $ 23 billion – the creation of direct and indirect jobs can reach 218 thousand jobs.

This diagnosis is the result of the study “Boosting Sustainable Development of the Amazon”. Prepared by the Escolhas Institute, the document was presented today (10/08) at the public hearing held by the Special Committee of the Chamber of Deputies that analyzes the tax reform (PEC 45/2019). Showing in numbers the economic, social and environmental benefits, the study suggests the diversification of productive activities in the Manaus Free Trade Zone based on four opportunities identified by public policy and regional development specialists of Escolhas: bio-economics; economic pole of digital transformation; eco-tourism; and fish farming. 

“The investment of over R $ 7 billion to boost the bio-economy in the state of Amazonas will create jobs in the Manaus Free Trade Zone as long as it is committed to a science and technology research agenda, skilled labor training, business environment creation that favors innovation and has the state teaming up with business and academia. This creates the necessary conditions for the Amazon’s economy to integrate into the 21st century from the global production chains. ”, Emphasized Sergio Leitão, director of the Escolhas Institute.

Of the total investments listed by the study, the largest figure – R$ 3 billion – is for the manufacture and launch of a geostationary satellite capable of boosting broadband access throughout the Legal Amazon. This expansion of digital offer coverage will enable Manaus to become the world’s first bioeconomic research, development and innovation (RD&I) hub, with the promotion of the currently underutilized Amazon Biotechnology Center (CBA).

There is also the indication of a furniture hub, integrated to the Free Trade Zone, with about 50 companies and investments of R$ 1 billion. This hub will use raw material from the “engineered” tropical wood production center – extracted from management areas – which will also be used by civil construction, to be implemented with investments of R$ 500 million.

One of the highlights of the Institute’s study is the still low sustainable use of natural resources. An example of this is fish farming. Data from the Organization for Economic Co-operation and Development (OECD) and the United Nations Food and Agriculture Organization (FAO) show that global production of dish farming is expected to exceed 100 million tons by 2025 – more than double of what was produced in 2005. However, Amazonas, even with large territorial extension to set up fish farms and recognized diversity of fish species, imports 58% of its consumption of fish from neighboring states of Roraima and Rondônia. If we consider only the Tambaqui – a fish that is a “trademark” of the Amazon – the import reaches 90%.

Scenario

The public coffers give up about $ 23 billion per year in tax waivers for companies located in Manaus Free Trade Zone (ZFM). However, the sectoral and regional incentive model has been questioned at various political and economic levels. Especially considering the current fiscal crisis of the Brazilian state, which has been drastically limiting its investment capacity. Therefore, a change of focus in public policies for the ZFM and for the entire state of Amazonas is urgent, constraining the establishment of goals for increased productivity and production aimed at the foreign market, with integration into global value chains; limitation of the period for granting tax benefits; strong R&D investment; periodic evaluation of results; and induction of innovation ecosystem involving the three spheres of government, academia and enterprise.

The document “Boosting the Sustainable Development of the Amazon” takes into account the current Brazilian tax moment. With the fiscal bottleneck of the various governmental bodies, the revision of incentive mechanisms is urgent. Not only by reducing subsidies for industrial production, but also by new methods of promoting regional development. In this sense, the participation of private initiative in investments is becoming increasingly fundamental to unleash such transformations.

In addition to Sergio Leitão, the public hearing included the Professor of Economic, Financial and Tax Law at the University of São Paulo (USP), Fernando Facury Scaff and the Special Advisor on Finance of the Municipality of São Paulo – Brazilian Association of Capital Finance Secretaries .

The full study on “Boosting the Sustainable Development of the Amazon” will be released in the coming weeks.

You can see here a study presented at the public hearing “Regional stimuli and budget flow”, promoted by the Special Commission for Tax Reform (PEC 45/19).

Press information:

Salete Cangussú – Communications Consulting – Escolhas Institute

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