Brazilian President Proposed $3.25 billion in Tax Breaks for Telecomm Networks

In an effort to strengthen Brazil's telecommunications network in the midst of the global financial crisis, President Dilma Rousseff plans to propose 6 billion reais ($3.25 billion) in tax breaks for construction in the industry.  This is just one in a series of tax breaks and other incentives aimed at protecting strategic industries in Brazil from feeling the impact of the global crisis.  It's also an expected part of the infrastructure improvement process as Brazil prepares to host for the 2014 World Cup and 2016 Olympic Games.  An auction for 4G telecommunications networks is planned for the end of April, but some companies have asked for a delay.  Analysts have warned that Brazil's existing networks will need a major overhaul to keep up with booming domestic demand, and the promise of an influx of tourists for the sporting events will put pressure on the country to make the improvements quickly.

Mexico City Introduces Electric Taxi Program

The infrastructure in Mexico City continues to strengthen with new programs aimed at generating economic value and reducing the city's level of air pollution.  As part of the "Green Plan" signed in 2009, Mexico City introduced its first 100 zero-emissions taxis.  Gabriel Fernandez, CEO of General Electric in Mexico, spoke at the inaugural ceremony held at one of the new charging stations.  "With the rollout of a quick-charge station like this one, the Mexican market is strengthening its energy security, driving innovation in clean energies, reducing dependence on oil and generating economic value for our inhabitants," she said during the ceremony, held at one of the stations.

Read it here at FOX Latino.

Honduras Cuts Security Tax after Angering Businesses

In response to US Secretary of State Hillary Clinton's claim that wealthy elite and businesses of Central America aren't doing their part to combat drugs trafficking and violent street gangs, Honduran President Pepe Lobo endorsed a fiscal package aimed at increasing the state's anti-crime budget. However, opponents of the plan claimed that the tax hikes would discourage business.  Intended tax increases included a 5% base metal export tax and a 3% bank withdrawal tax, from which the private sector argued that tax revenues would far exceed the desired $79 million annually.  Two laws from the proposed plan stay in place: a 1% tax on mobile telephone companies and a 0.5% tax on fast-food restaurant profits. Lawmakers hope that the revised tax plan will provide sufficient revenue to make a dent in the drug and violent crime problems without making it impossible for private enterprise to survive.  The question remains as to which factor will be more detrimental the Honduran private sector: high taxes, or unsafe perceptions of the country that could discourage external investors? In 2010, Honduras had a homicide rate of 77 murders per 100,000 inhabitants, and Mexico, a country constantly painted by the US press as being violent and dangerous, had a homicide rate of only 14 per 100,000 inhabitants. 

Read it here at Reuters.

As IT Outsourcing Services Decline, Nimble Providers see Opportunity

Denis Barker from Sourcing Line found that the IT Outsourcing Services Sector declined at a rapid rate last quarter, according to Ovum's IT Services Contract Quarterly Analysis.  The number of deals worldwide fell to 384, and total contract values dropped 40% compared with the second quarter of last year.  The Q2 numbers haven't  been this low since 2003.   There is, however, a bright side: alternatives to India, primarily destinations in the Asia-Pacific region, haven't been hit as hard by this trend and dropped a mere 4% last quarter.   Who's to blame? The "lousy US economy" makes the list, as does IT buyers' demand for "hard benefits".  Buyers need to know that in addition to cost savings, outsourcing spending is bringing innovative approaches to the transformation process.  Nimble providers with the ability to present buyers with a unique value proposition that could not be achieved in-house.  


Read it here from Softtek Blogs.

2011 Nearshore Destinations Ranking

Nearshoring has become a popular and intelligent option for US companies that are not only looking to lower costs, but also want that cultural affinity and technological innovation that lend themselves to increased productivity and expertise.  Latin America as a whole is gaining credibility, but it is important to delve deeper than the regional level to find the place where a company can attain the most value.  With this in mind, ThinkSolutions took 19 countries in Central and South America to determine their overall appeal as nearshoring service locations and ranked them according to their financial incentives, business environment, and labor force.  We placed emphasis on factors that would bring out the unique characteristics of the region, such as cultural affinity, time zone alignment, technological readiness, and language capabilities.  These rankings will be updated quarterly or as major events occur that alter the outsourcing landscape. Click here to request a white paper. 

Brazil Industry Losing Out to Lower-Cost Mercosur Members

Brazilian industry leaders are complaining that the strong growth of the Brazilian economy and the Super Real are acting as a disincentive to Brazilian investment.  Brazilian companies are turning instead to less expensive options like Argentina, Paraguay, and Uruguay.

With the Super Real, manufacturing in Brazil has become very expensive and Mercosur partners offer comparative advantages: Paraguay, cheap energy; Argentina, natural gas at competitive prices and Uruguay qualified labor.  On top of this, the total cost of taxes is significantly higher in Brazil compared to other Mercosur members.

Read it at MercoPress.

Bolivia Accuses US of Sparking Protests

Bolivia's government is accusing U.S. officials of meddling in the South American nation's internal affairs and fueling indigenous protests of a proposed highway project.  The Bolivian government approved a 190-mile highway that will cut through the heart of the Isiboro-Secure Indigenous Territory and a wildlife preserve, so a number of indigienous groups are in opposition to the construction.  President Evo Morales claims to support both indigenous rights and the protection of "Mother Earth", but argues that the road is essential for the national integration and modernization of Bolivia.

An influential Bolivian official called Wednesday for the expulsion of the U.S. Agency of International Development, accusing the agency of promoting actions aimed at "destabilizing" the government.

"The expulsion of USAID should be ... an act of sovereignty," said Juan Ramon Quintana, director of a Bolivian government development agency and a former top presidential aide.

His remarks came as hundreds of indigenous protesters trekked toward La Paz, protesting the proposed construction of a highway through a national park where indigenous communities live. Quintana showed documents that he said proved that officials from the agency were behind the movement.

Read it at CNN.

Mexican Peso Falls 0.9% As Local Currency Bonds Sell Off

On Wednesday, the Mexican Peso fell 0.9% against the US Dollar, due to the dropping of bonds after a sustained rally on heavy foreign direct investment.  Analysts have been watching with unease as foreign investors accumulate record numbers of peso bonds.  Mexico also broke a six-month streak of trade surpluses in July, when they posted an unexpectedly high trade deficit, but inflation was unexpectedly tame in the beginning of August as a decline in agricultural prices stopped the predicted rise in the cost of consumer goods.


Read it here at the Wall Street Journal.

Brazil's Economic Growth Must Slow to be Sustainable

With an average economic growth rate of 5% since 2003, Brazil's economic strength has increased its appeal as a nearshore destination, contributing to job growth, advanced technological expertise, and safer investments for buyers.  However, Tony Volpon, a managing director at the Nomara Group, predicts that for Brazil's economy to stabilize, annual growth must slow to 4% or less.

Is there a credit bubble in Brazil? Volpon says no, but rings some alarm bells anyway. “Excessive optimism on the part of creditors and inexperienced banks combined with inadequate prudential policies lead to excessive leverage,” he wrote. “The explosive growth of loans for cars, which already exceeds 4% of GDP, and the acceleration of housing prices are warning signs that we are on the way to creating an unsustainable structure of liabilities within the economy,” he wrote.

The decline in productivity shows that the irrational exuberance of the current job market is about to end, he wrote. “Entrepreneurs may individually believe for a time that the laws of supply and demand do not apply to them, and of course there will always be sectoral distinctions that have to be taken into account. But for the economy as a whole, lower economic growth lowers corporate revenue. If they continue to hire and award wages increases they will see their net profits decrease. A falling rate of profit must then bust the bubble in the labor market.  The slowing credit growth should limit the strong growth of recent years,” he wrote.

Read it at Forbes.

Mexico's Silicon Valley: Getting the Real Story

Let's face it - despite the fact that Mexico is 'close' to the USA, its unique IT talents, capabilities and achievements exist far from the spotlight of the IT business culture of the United States. But as the world continues its shift toward globalization, economically interwoven model - where cross-border bonds become deeply vital to sustaining a competitive position - the presence of Mexico at the doorstep of the US is becoming an important strategic opportunity for the next generation of IT services-focused enterprises.

For example, tier one IT giants like IBM, Dell, HP, Intel, TCS and others have found a home in Mexico's Jalisco state, drawn by its powerful mix of IT talent, world-class infrastructure and stable economics. Jalisco, in fact, boasts over 12 nationally-recognized universities, 12 technological universities and 14 technological institutes. These schools graduate more than 6,000 engineers a year, and many of those students walk out of their university environments as fully bilingual professionals.

Isn't it about time US business and IT leaders got to know the real Mexico?

Come join us for a very special executive briefing on September 8th at The Roosevelt Hotel, where Nearshore Americas will host a business-driven discussion about the opportunities that Mexico and its thriving 'Silicon Valley" of Jalisco are offering to the world.


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Students Protest for Education Reform in Chile

On Friday, August 12, Chilean officials ordered an end to protests, stating that "Chile is not going to be governed from the streets".  Fed up with civil disorder in Santiago, authorities are urging student protest leaders to seek out official avenues for education reform.  Protests against Chile's privatized education system have been carrying on for months, with Chilean college and high school students demanding reform to an education system that leaves many in crippling debt upon graduation.  Students have, for the most part, refrained from violence in favor of more creative demonstrations, some of which involved superhero outfits and Lady Gaga costumes.  On June 6, with “pasión por la educación”, thousands participated in a kissing protest, and on June 24, three thousand students organized a flash mob to "Thriller", declaring that "the present [education] system is rotten and dead."  Last week, violence escalated as students demanded airtime on national television and the government ceased authorization of the organized marches.  Riot police have resorted to tear gas and water cannons in an attempt to maintain "business as usual", and 873 arrests were made after the first day of rioting.  

     

The video below gives a solid overview of the events that have transpired:

Back in January 2010, Nearshore Americas named Santiago the safest and least corrupt capital city in Latin America, and Chile is the most politically sound country in the region.  This serves as a reminder of the risk of doing business in Latin America, where unpredictable social and political environments can distract, or worse, endanger employees and operations.

Bolivian Senate Approves Controversial Telecom Bill

The Bolivian Congress dominated by the political party of Evo Morales, approved last Thursday night a controversial bill of telecommunications. This bill was criticized by the opposition and the press since it gives the government the permit to listen phone lines, this is a threat to the media such as the radio and television.

The bill gives a 33% of the electromagnetic spectrum to the Estate. According to the critics of the law, Morales would control a 67% of the electromagnetic waves due to his relation with indigenous organizations, this could provoke that the private media lose their licenses.

Meanwhile radio stations associations and journalists criticize the bill since, in their opinion, it assaults the freedom that the Constitution promotes to the independent media and could allow the manipulation of the media. The president of the Bolivian Association of Broadcasters (Asbota) commented to the Bolivian newspaper La Razon (The Reason) “that this is a serious threat to the freedom of speech.” 

Journalist protests for his right to Freedom of Speech

Source: The Ecuador Times