PDP wants sustainable growth of domestic production

Exports increase and domestic market development are complementary goals in the government's new policy.

Introduced by the government on May 12, the Productive Development Policy (PDP) has set up necessary targets to consolidate the position of Brazil as an important trade player on the worldwide set. In the words of President Lula himself, during the policy inaugural speech, “our country wants to recover the ability of creating and daring, and therefore the Productive Development Policy has strong largeness and ambitions comparable to those of other initiatives, which in other seasons helped to economically transform the country, as the Target Plan in the 50’s and 60’s and the second PND in the 70’s”.
To speak more about the PDP and its influence on the footwear-leather segment, and also its effects on the internal market and taxation policy, we invited to this edition’s Rendez-Vous the president of the Brazilian Agency for Industrial Development (ABDI), Reginaldo Braga Arcuri.
Arcuri was Secretary of State for Industry and Trade of Minas Gerais, Secretary of Production Development of the MDIC and managing director of the Secretariat of Mercosur, with seat in Montevideo, where he remained until 2005. Before assuming the ABDI presidency, in June 2007, Reginaldo Arcuri was president of the Institute for Integrated Development of Minas Gerais (INDI).

COUROBUSINESS: The Productive Development Policy (PDP) wants, until 2010, to increase the Brazilian participation in world exports to 1.25% of world trade. Over the last ten years the leather and footwear export jumped from US$ 2 to 4.2 billion per year. How do these segments, of consumer assets, will integrate the efforts of increasing exports in the context of the national target fixed?

ARCURI: The general export target is US$ 208.8 billion and it is equivalent to an average increase of 9.13% per year compared with the year 2007. Considering the segment involvement in total exports (3% in 2005) and if this percentage of participation remains in 2010, total exports could reach about US$ 6.3 billion. For the achieved hide export, the target of growth established in dialogue with the segment shall be 10% per year.
We started, from now, through the Forum on Competitiveness, the detailing of programs and actions which will enable us to achieve the goal. And in this case, the whole experience of the Centre of Industries of Tanneries in Brazil (CICB) will be essential input so we can build together the best solutions. There are ideas of the segment that shall play a decisive part in the operation, in which the technological content increase and the products added value of the production chain, along with the diversification of markets, have a role of prominence so we achieve the proposed goals.
In the leather segment, for example, we have the increasing use of achieved hide in the furniture and automotive industries, and in the footwear segment, besides the promotion of exports and diversification of markets, we have encouraged the export of footwear and leather artifacts, with increasing incorporation of new materials with innovative design, of TCIs (Information and Communication Technology), nano biotechnology and, especially, with the quality attributes demanded by the market.
In the process of building a prospective study, accomplished by the ABDI in partnership with the private segment, it was identified some strategies for the industry, among them the possibility of the Brazilian leadership in obtaining certification of comfort for footwear. That would lead our industry to compete in a different way with the footwear producers of low cost and / or high value on the international market.

COUROBUSINESS: The export of these segments, traditional visitors of world trade, suffers an inevitable competition of the internal market growth. The export target can be endangered depending on the growth of the internal economy? How does the government assess such situation?

ARCURI: This is a good problem to be faced by the segment. The expansion of the internal market is one of the key elements for the sustainable rhythm of growth actually seen in Brazilian economy. The maintenance and growth of exports of this important productive chain also pose challenges for both the government and private initiative. And that is why PDP is based on a goal of expanding its investment in a higher speed than the GDP (Gross Domestic Product) growth: so that we can, through the growth of our industry, occupy new places in foreign markets and ensure the supply required by the Brazilian population. And everything with the ongoing process incorporation and innovative products.
That is the point I would like to emphasize, because with the resumption of the Boards of Competitiveness, we begun to have a space to discuss, develop and build the measures that help to create the conditions for the growth of Brazilian exports of the segment, through the coordinated use of various instruments under the federal government, the increase of general private investment and of R&D (Research and Development) and the incorporation of new companies, especially PMEs (Small and Medium Enterprises) in export activity.

COUROBUSINESS: “The success of the PDP depends on the ability to mobilize the productive segment in the directions proposals”. What is coming, in that way, post-introduction of the PDP?

ARCURI: The link between the public and private segments in the construction of common goals and in the coordinated implementation of programs and actions of the PDP is one of the pillars of that direction. Demonstrating that in practice, the minister of Development, Industry and Foreign Trade, Miguel Jorge, in the next day of the introduction of the policy by the president, started a sequence of meetings with representatives of the private segment, being the first on May 13, with the Forum for Textile Competitiveness and Ready-made Articles. The following day already, the minister also met businessmen and employees of the footwear-leather productive chain. By mid-June, there were at least 12 meetings with forums of competitiveness.
The Secretary of Development Production (SDP) of the Ministry of Development, Industry and Foreign Trade (MDIC) has continued with work meetings which shall prepare agendas and schedules, set goals and responsible staff for conducting programs and shall allow the preparation of contracts of competitiveness for each productive chain. These contracts, which shall not include any punitive character, will be the “road maps” that the public segment and the companies will use to reach the goals built together, because they will be based on counterparts of both parties, directed to the same general objectives of increase of investment, of exports innovation and of competitiveness.

COUROBUSINESS: Reducing the term of credit appropriation of PIS (Social Integration Program) and COFINS (Contribution for the Financing of Social Security)  derived from the acquisition of capital goods from 24 to 12 months is an information. But the recovery of credits of ICMS (State Added Value Tax) remains in 48 months. Is there any initiative to bring the state governments into the effort of the PDP?

ARCURI: The ABDI and the Ministry of Development, Industry and Foreign Trade, in close partnership with the National Confederation of Industry, are starting a series of presentations of the PDP in the states. The purpose of these roadshows is to show how the incentives and benefits of the policy can boost production, local and nationally. We have received a very positive answer of states with regard to the measures, guidelines and actions of the PDP. We believe that the state governments and federations of industry across the country will adopt this initiative of the federal government as a way to develop the regional industry.
            The issue of state taxes, however, is specific to each federation unity, which will address the subject in specific way, without the intervention of the federal government.

 

Revista Courobusiness, Ed. Nº 58 – Mai/Jun 2008.