Foreign direct investment (FDI) in Brazil

FDI in Figures

Brazil is among the main FDI receivers in the world: according to the World Investment Report 2024 published by UNCTAD, the country was the fifth globally with USD 65.9 billion in inflows, compared to 73.3 billion one year earlier. At the end of the same period, the total stock of FDI stood at USD 997.5 billion. According to the latest figures available from the Brazilian Central Bank, Europe remains the largest holder of FDI stock in Brazil, accounting for 61.5% of the total. North America ranks second, with 23.3%. The leading immediate European investors are the Netherlands, Luxembourg, and Spain, holding 41.2%, 15.5%, and 10.0%, respectively, of Europe’s total position (USD 649.9 billion). North America's immediate investor FDI position totalled USD 245.7 billion, with the United States accounting for 84.6% of that amount. On a sectoral level, companies engaged in financial services and auxiliary activities, including investment funds, account for 19.2% (USD 153.5 billion) of the FDI position. They are followed by companies in the trade sector (8.1%), oil and natural gas extraction (7.4%), and electricity, gas, and other utilities (5.6%).

The country is an attractive destination for international investors due to several factors: a domestic market of over 210 million inhabitants, availability of easily exploitable raw materials, a diversified economy that is less vulnerable to international crises, and a strategic geographic position that allows easy access to other South American countries. However, investment in Brazil remains risky because of negative factors such as cumbersome and complex taxation, bureaucratic delays, poor infrastructure,   and heavy and rigid labour legislation. The Brazilian government actively promotes FDI, focusing on sectors such as automobiles, renewable energy, life sciences, oil and gas, mining, and transportation infrastructure to drive innovation and boost economic growth. Investment incentives include tax breaks and low-cost financing, with most sectors offering equal treatment to domestic and foreign investors. However, foreign investment faces restrictions in sectors such as healthcare, mass media, telecommunications, aerospace, rural property, maritime operations, and insurance. Despite these limitations, foreign investors generally receive the same legal treatment as local investors in most economic sectors. The country ranks 50th among the 133 economies on the Global Innovation Index 2024 and 127th out of 184 on the latest Index of Economic Freedom.

What to consider if you invest in Brazil

Strong Points

Advantages for FDI in Brazil:

• Extensive natural resources
• A large middle-class and a large domestic market (7th largest population in the world)
• A strategic geographic location
• A diversified economy, well anchored in international exchanges (FDI inflows and foreign exchanges reserves are important, low external debt)
• Export sectors, especially in industry, represent investment opportunities, thanks to the weakness of the real exchange rate

Weak Points

Despite being open to international trade, some of the barriers to FDI in Brazil include :

• Onerous labour laws, resulting in high costs to foreign companies and keeping a good part of local business in the informal sector
• High costs of production (wages, credit, energy and logistics)
• Insufficiently developed infrastructure
• High level of regulatory risk (high taxation and heavy fiscal system)
• High exposure to changes in commodity prices on international markets
• Shortage of qualified labour

Government Measures to Motivate or Restrict FDI

The Brazilian Government encourages and promotes FDI. The National Investment Bank (BNDES), one of the largest development banks in the world, encourages foreign investment. Most of the barriers to foreign investors have been removed, particularly on the stock market. A very large number of public companies have been privatised and many sectors were deregulated over the last fifteen years.

Among the Brazilian initiatives to attract investors there are numerous incentives: Inovar-Auto Programa, that aims at improving technological development and energy efficiency; Consulta Pública Ex-Tarifário, which enables increased innovation by companies through  a temporary reduction in the rate of tax on the import of capital goods; Renai, which provides information to potential investors on business opportunities in Brazil. Moreover, Brazil’s federal government offers investment support through funding and agreements limiting double taxation.

The Brazilian Trade and Investment Promotion Agency (Apex-Brasil) is the national investment promotion agency for Brazil. Apex-Brasil webpage offers information about the Brazilian tax system, industrial property protection, labor and environmental legislation, credit support and incentives for foreign investors.

Bilateral investment conventions signed by Brazil

Brazil has signed several bilateral agreements for the protection of foreign investments. To see the list of countries and conventions, click here.