Brazilian government cuts power rates

The financial implications of running a business may be a worrisome aspect that executives fear the most. For instance, laws in Brazil will require many companies operating in this country to abide by tax regulations and other tariffs. However, with the help of a Brazilian lawyer, it becomes easier to navigate through the complicated litigation procedures within any foreign nation.

With the government attempting to make a stronger economy in Brazil, there are many monetary-based changes taking place that may affect business operations. Reuters reported that Brazilian President Dilma Rousseff announced significant reductions for the power rates in this country. Household electricity rates will be cut by 18.5 percent on average while rates for industrial consumers will drop by at least 32 percent.

The administration’s decision to cut these rates, it shows the perceived threat of rising consumer prices, as inflation has increased faster than expected in the last month. The central bank has released reports that show a 20 percent cut in electricity prices should decrease inflation by a full percentage point by the end of 2013.

“Rousseff’s expected announcement comes amid concern that reservoirs at hydroelectric dams, which provide two-thirds of Brazil’s power, are at their lowest level in a decade,” the news source stated. “A budding energy crisis early this year and speculation that the country had to use more expensive thermal energy had cast doubt on Rousseff’s ability to lower energy costs.”

Nelson Hubner, country head of the national electricity Agency (Aneel), has said that there would be no issues with power during the 2014 FIFA World Cup in Brazil, according to the online publication Parda Phash.

Businesses operating in Brazil would be wise to consult a Brazilian law firm regarding the financial status of the country and its plans to transform consumer inflation prices.

Inflation Rates Affecting Businesses

Businesses developing dealings in Brazil will often encounter challenges with meeting the financial regulations of this country, such as tax laws and tariffs for certain product trades. Banking regulations in Brazil may also pose certain difficulties for companies that are undergoing changes, such as mergers, real estate purchases or acquisitions. Business owners would be wise to consult a Brazilian lawyer from a quality Brazilian law firm regarding the financial laws of tariffs, taxes and real estate developments.

The international news-based blog Beyondbrics reported that Brazil’s monetary policymakers held the interest rate for the country at a steady 7.25 percent due to the belief that this will keep inflation on a downward spiral. However, market economists have predicted that inflation will rise in 2013 despite the interest rate regulations. So far,inflation has increased from 5.53 percent to 5.65 percent.

Last year, the country’s consumer inflation was also 1.34 percent higher than the government’s targeted rate of 4.5 percent. Monetary stimulus has also had little impact on Brazil’s economy, according to the source.

However, a January 21 article from Bloomberg shows that the measure of inflation is lower than expected, which means policymakers will not have to raise benchmark borrowing costs. Some prices, such as wholesale, construction and consumer, did rise in January.

“There was an unexpected deflation of agricultural products, which is even more surprising in January, when food costs generally surprise on the upside,” Flavio Combat, an economist at Concordia Corretora, told the news source in a phone interview. “We also had a small drop in growth forecasts that weighed a bit on the market.”

The consumer inflation rate can affect the transactions of any business. With the help of a Brazilian law firm, companies encountering financial and legal difficulties will be able to cross these challenging roads effectively.

Ecommerce in Brazil

Businesses that are attempting to work within Brazil are often focused on providing consumers or other companies with necessary products. This may take the form of e-commerce, as more customers have focused on shopping online in order to avoid hectic delays at the mall or local stores. When it comes to electronic commerce, various businesses may decide to buy real estate in Brazil and set up new sites or factories to develop the products for sale.

All of these business dealings will bring about the need to work with a Brazilian law firm and expert Brazilian lawyers who are knowledgeable on business mergers, acquisitions, and real estate law. A knowledge in Brazilestate law is necessary for any company that wishes to expand services to this country and provide an e-commerce option for their customers.

Some of the laws in Brazil that affect electronic commerce development include security management, unsolicited e-mailed advertisements, commercial codes and transaction authentication. The information entered in by patrons of a company, for example, shows the need for strict security policies, as credit card data could bring hackers to a website. Data security is becoming a major objective in the new year for many businesses, according to a press release issued by the financial advisory firm Deloitte Touche Tohmatsu Limited.

“Security is finally on the agendas of the board and C-Suite executives. It’s one of the most significant shifts we’ve seen among our TMT clients over the past 12 to 24 months,”Irfan Saif, principal of Deloitte & Touche LLP and security and privacy leader to the TMT sectors, said in the press release. “Moreover, organizations are beginning to view security as a value-driver for the business and a marketplace differentiator, and companies are now thinking about how to shift their strategy for driving security across the enterprise.”

Business Growth

Businesses developing negotiations and signing contracts with other parties in Brazil should look toward a Brazilian lawyer experienced in business law to provide the necessary background for a successful transaction. Right now is the opportune time for companies to invest in this country, as industry productivity is growing in Brazil.

The Rio Times reported that Brazil’s activity in the industry sector has risen 2.5 percent in November 2012. The Brazilian National Confederation of Industry (CNI) released a survey that shows this growth, which should bring more hope to business executives and subsequent employees hoping for a stronger economy in Brazil over the coming months.

Analysts have said that this generates optimism for a stronger recovery in 2013, as the figures indicate a more robust end to the last year. The retail industry, specifically clothing, has seen a dramatic increase in hiring, with 11.3 percent more people employed, while overall growth increased by 6.2 percent.

A government announcement recently stated that Brazil is set to sell 172 oil blocks this coming May, according to the news source. This may further push economic recovery. It will also put an end to a five-year break that caused problems for the business strategies of many oil firms.

“There will be 172 blocks up for offer, onshore and offshore, divided among seventeen sectors, in nine sedimentary basins,” the National Petroleum Agency said in a statement. “The highlight of the eleventh round will be the Equatorial Margin, made up of the Fozdo Amazonas, Pará-Maranhão, Barreirinhas, Ceará and Potiguar basins. The region is considered highly promising due to the recent recorded discoveries.“

Businesses attempting to create more opportunities for themselves in Brazil should consider working with a Brazilian law firm to ensure that all laws in Brazil are followed.