By TONY SMITH, AP Business Writer
SAO PAULO, Brazil (AP) - Technology industry officials were jubilant Thursday, a day after Congress passed a law extending tax breaks for the sector for nine years in all regions of the country.
In a late-night vote Wednesday, lawmakers passed an information technology law that has languished in Congress for almost a year. To take effect, it must now be approved by President Fernando Henrique Cardoso within 15 working days.
The law foresees tax breaks and incentives for producers of high-technology equipment such as computers, video monitors and cell phones across Brazil until 2009.
The law's passage represented a victory for Brazil's rich, southern states, and particularly Sao Paulo, over politicians from the Amazon who have been fighting to defend decades-old privileges granted to a duty-free manufacturing zone in Manaus, their region's capital.
The new law gives a few extra advantages to the duty-free zone until 2013 but probably not enough to convince investors to turn their back on the south, home to Brazil's main markets and export facilities.
``We all welcome this enthusiastically,'' Hugo Valerio, director for government relations at Compaq Brazil, told The Associated Press in a telephone interview. Like many tech manufacturers, Compaq operates out of Sao Paulo state.
``The impasse generated insecurity, nobody in the sector really knew what was going to happen, whether we would continue our investments in Brazil or not,'' he said. ``We were apprehensive, now we're more reassured.''
Sao Paulo state's Secretary for Science, Technology and Economic Development Jose Anibal told business daily Valor that the law ``establishes a new, fair policy for the sector.''
The impasse over the law has kept on hold a series of major investments in the technology sector worth as much as $7.5 billion, according to the Ministry of Industry, Trade and Development.
Ministry sources claim at least five major foreign manufacturers were holding off setting up in Brazil until legislation was cleared up.
Last week, a vice president of chip manufacturer Intel visited Minister Alcides Tapias. In January, Tapias is to receive a high-level delegation from cell phone chip maker Analog Devices.
One of the first projects expected to go ahead now is a much-discussed Dell computer factory worth some $125 million and reportedly destined for Rio Grande do Sul state, bordering Argentina and Uruguay.
Pauderney Avelino, deputy for Amazonas state, said his region would challenge Wednesday's vote in the Supreme Court.
Early this month, the court granted an injunction to suspend tax breaks granted as a stopgap measure to producers of high-tech goods outside the Manaus area.
The tech sector retaliated by threatening to raise prices as much as 20 percent.
Brazil's $560 billion economy is by far Latin America's largest and accounts for about half of South America's output. The electronic goods sector grew 21 percent this year. |
