Nearshore Americas

Brazil Finally Tackling Policies That Stifle Business, Innovation

By Filipe PachecoOne of the biggest complaints heard from foreign investors in the IT outsourcing industry is that the laws that must be followed when starting a company or doing business on Brazilian soil are too complex and confusing. Both federal legislative houses are debating a series of new regulations specifically designed for the technology industry. If actually enacted, the policies could make it easier for IT outsourcing and related organizations to do business in Brazil as well as foster innovation domestically. Proponents from the research and tech community say the alternative will mean inability to compete.

Brazil’s new minister of Science, Technology and Innovation, Marco Antonio Raupp, has thrown his support behind the proposed streamlining efforts. Raupp defended publicly the regulation of innovation investments back in January, shortly after he replaced Aloizio Mercadante as minister. “It is necessary to establish a legal structure that permits public-private interaction,” he said. “We also need to improve the legal processes that govern innovation so that more companies and research entities continue to invest in innovation.”

In October of 2011 a group of 17 scientific entities from different parts of the country gathered to propose a “project of law” to create the Código Nacional de Ciência, Tecnologia e Inovação – a national code for the science and technology sector. Among those entities were the Brazilian Society for the Progress of Science (SBPC, of which Raupp was president before becoming minister).

In the Senate, the group allied with senator Eduardo Braga, from the state of Amazonas and the current president of the Science, Technology and Innovation, Communication and Informatics Commission. But the group’s proposal is stuck in the internal bureaucracy of the Constitution, Justice and Citizenship committee. The same thing has happened in the House of Representatives, where 10 different deputies supported the proposed changes.

For SBPC president Helena Nader, the issue is quite simple. “We either change the laws or it is going to be impossible to compete,” she told Agência Brasil, the national news agency.

The main goal of the legislative proposal is to create mechanisms that facilitate and stimulate contact between research centers and the private sector and thus further the development of new products and processes.

According to the proponents of the regulatory changes, the public would benefit as a result of accelerated research, technology transfer, and increased sharing of scientific and technical knowledge.

“It is time for Brazil, which already has a penal code and an environmental code, to also have one for science, technology, and innovation,” said Mario Neto Borges, president of Confap, a national council for the support of research agencies. He told Agência Brasil that the code currently going through the bureaucracy of both houses will allow the country to become an international producer of technology.

But the longer the proposal is stuck within the Houses, the more the country loses in terms of competitiveness. Most innovation produced in Brazil is by scientific institutes supported by governmental organs or held within public universities. Among the recommended reforms is the sharing of information among the research entities and private companies, with sharing of laboratories as well as equipment and materials. The proposal would also require that the federal government, the states, and the municipalities (counties) make “concessions” of human and financial resources to private research centers.

If the new reforms pass, the agencies focused on innovation would no longer have to follow the bureaucratic rules and bidding processes for purchasing equipment, for example. Acquisitions would be faster, and criteria would include quality and durability rather than simply the lowest price.

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Danger of Deindustrialization

For Célio Cabral, manager at the Inovação do Instituto Euvaldo Lodi (IEL), which is associated with the Industry Federation of the State of Minas Gerais, the establishment of true partnerships among the public scientific entities and the industrial sector is important to fight “deindustrialization” in the country, which is characterized by the local industry not being able to compete with foreign products (especially Chinese ones). “Innovating becomes an imperative. We have to treat innovation in a systemic way, so it does not become an isolated idea or proposal,” he says.

Senator Sibá Machado, from Acre, says that there is no major point of disagreement regarding the proposal – it is just delayed due to the regular schedule of the Senate. According to the deputy Bruno Araújo, from Pernambuco, the issue “does not generate political dispute,”and in fact has a high level of support, so it should pass without much difficulty in either legislative body.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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