Latin America has a Gross Domestic Product of US$6.7 trillion (S$9.1 trillion), which is more than twice that of ASEAN’s1. The huge and growing population of over 600 million people in the region is taking to e-commerce, with over two-thirds of the population (139 million) owning smartphones and on average spending 9 hours a day on the internet, outstripping that of the average American user (6 hours). E-commerce penetration in Brazil has increased to 6%, a higher penetration rate than other fast developing economies like India and Russia2. This is set to grow Latin America’s e-commerce market from US$59 billion (S$80 billion) in 2017 to US$118 billion (S$159 billion) in 20213. The artificial intelligence (AI) sector is growing fast, with AI technologies being used across consumer, enterprise, and government markets. The AI sector is projected to increase exponentially from US$95 million (S$128 million) in 2017 to US$2.1 billion (S$2.8 billion) in 20254
If you want to enter the huge Latin American market, consider starting with Brazil, the largest and most tech-savvy market in the region.
Brazil is seen as the leading innovation and e-commerce hub in the region. However, the local digital market is just taking off and in-market solutions are lacking. If you are in the digital technology space, there are tremendous opportunities for you to seize first mover advantage to meet increasing demand for technological solutions in Brazil’s private sector.
There is demand for digital solutions in Brazil’s e-commerce, fintech and healthcare sectors. In the area of fintech, banks are seeking solutions (including AI) to improve their operational efficiency, as well as to provide the 60 million unbanked Brazilians with online/mobile banking, payment and remittance services. The healthcare industry is looking for ways to improve the efficiency of healthcare delivery and provide more affordable healthcare for patients.
By offering more cost-efficient, niche solutions that can meet the specialised needs of these different sectors, you are likely to have an edge over larger competitors. Singapore’s well-respected brand and reputation for data privacy and reliability will also stand you in good stead.
Find out why Benedict Koh, Enterprise Singapore’s Regional Director, São Paulo, thinks that Brazil is a market that Singapore tech companies have to consider right away, and what advice he has for companies looking to get a foot in the door.
1 International Monetary Fund, 2019 2 Brazil Digital Report – 1st Edition 2019 3 “Latin America Leads Worldwide E-Commerce Growth”, WorldPay, 20 October 2017 4 Statista, 2018
Brazil ranks seventh in the world for crude oil production and first in Latin America for natural gas reserves5.
In its 2018-2022 Business and Management Plan, state-linked petroleum giant Petrobras estimated US$74.6 billion (S$100.7 billion) worth of upcoming investments, 81% of which is earmarked for exploration and production.
Recent discovery of vast offshore and deepwater reserves prompted the Brazil government to relax its regulations for the oil industry in 2017, with the aim to encourage research and development, boost foreign investment, and lower business costs. With the planned drilling of over 90 Petrobas-funded exploratory wells over the next 5 years (currently 49 wells online as of May 2019), there will be a marked increase in oil production. This development has attracted a following of large investors interested in entering into partnership with the oil giant regarding the lucrative pre-salt sea blocks6.
Several Singapore companies with the capabilities sought by Brazil’s exploration and production segment are operating in Brazil’s large-scale shipyards today. Players in the marine and offshore engineering industry can also look out for opportunities in rig-building, ship conversion, module fabrication, supply of offshore service vessels and subsea engineering.
5 World Data Atlas, 2019: https://knoema.com/altas/topics/Energy/Oil/Production-of-crude-oil 6 S&P Global, 2019
Brazil launched the Programme for Partnerships and Investment (PPI) in 2016 to bridge the country’s huge gaps in infrastructure, improve access to utilities, and create new jobs. It also included plans to privatise sanitation and power assets.
The Brazilian government has since made several strides forward, with plans to launch dredging and land infrastructure starting from 20197. This has opened up opportunities for Singapore companies in the following areas:
Airport – A bidding announcement in 2018 was issued for 30-year concession of 12 airports in the Northeast, Southeast and Mid-Western regions.
Port – Brazil’s ports are in need of investment to increase its capacity to meet growing demand, reflected in an earlier announcement to national congress in 2019, with the intention of expanding seaport infrastructure capacity by 11.25 million tons/year. You can explore taking part in expansion projects for existing p/orts or investing in new ports in the country.
Bus and rapid transit systems – Cities such as São Paulo, Rio de Janeiro and Salvador are looking at expanding their bus and rapid transit systems with plans to construct and maintain road infrastructure comprising around 5,000 km worth of highways. If your company has expertise and experience in developing large-scale electronics, urban transit and security systems, you can explore opportunities in this sector.
Water – You can consider investing in projects such as build-own-operate and build-operate-transfer, or by providing consulting services, equipment or water technology solutions.
E-government – Firms with expertise in e-government project consulting and feasibility studies will find demand from the Brazilian authorities at the federal, state and municipal levels. The local government is looking to e-services to facilitate infrastructure development and trade.
7 “Mensagem ao Congresso Nacional 2019” (Message to the 2019 National Congress)
Agribusiness is one of Brazil’s largest economic sectors. With the value of the agriculture industry grossing a massive 3.3 Billion USD in the last quarter of 2018 alone, Brazil ranks amongst the powerhouses of global agriculture market8. Brazil is the world’s largest exporter of beef, coffee, frozen concentrate orange juice, poultry, soybean, sugar and tobacco. It is also a major producer of corn, pork and cotton. Over the next ten years, Brazil’s food supply will grow above the global average9.
One attractive investment opportunity is in the area of agriculture technology. There is demand for technological innovation to raise agriculture productivity sustainably, without damaging Brazil’s natural environment. Increasingly discerning consumers are also more conscious about food nutrition and sustainable food sources. You can explore playing a role in Brazil’s sustainable agribusiness by providing low-carbon production technologies.
8 Brazil GDP from Agriculture, Trading Economics, 2019 9 Agriculture Outlook Report, United Nations Food & Agriculture Organisation and the Organisation of Economic Cooperation and Development, 2017