CNI President: ‘The word subsidy has become pejorative’ – 05/09/2023 – Market

Elected president of the CNI (National Confederation of Industry) on Wednesday (3), Ricardo Alban will arrive at the post with the message that the discourse in defense of reindustrialization needs to be updated to “neo-industrialization”.

Alban says he sees windows of opportunity in research, innovation and the opening up of new markets by geopolitical changes. He also avoids the word subsidy to address incentives and targeted funding.

In his first interview after being elected, Alban states that Brazil needs to consider expenses in the search for fiscal balance, instead of focusing on increasing revenue. And the problem of high interest rates, according to him, can be solved with dialogue and tools such as the compulsory deposit, without the need for a political clash.

Alban is also president of Fieb (Federation of Industries of Bahia) and partner of Biscoitos Tupy, his family’s food factory. He takes office on October 31 to succeed Robson Andrade in the four-year term.

Mr. he will reach the presidency of the CNI still in the first year of the Lula government 3. What do you hope this administration can do for the industry? The simple fact that he has recreated the Ministry of Industry and Commerce already gives rise to favorable expectations. Inviting the vice president to be the minister adds even more weight. Geraldo Alckmin demonstrates commitment to make a more aggressive industrialization process that mitigates gaps in the past.

There is a perception of updating. The fact that we change our discourse, from reindustrialization to neoindustrialization, motivates us even more. When looking forward, we cannot say that it is simply a reindustrialization. Brazil used to be more industrialized, but it still is, with cutting-edge industry niches.

But on the whole, we have to rethink where we need to recover, stimulate and even support needs in sectors that need to gain new competitive advantages or mitigate disadvantages.

Looking back at other PT administrations, especially the experience of the Dilma government, is it necessary to be careful? Being technical and pragmatic, in Brazil, since the time of the military, without making any apology to the dictatorship, we do not have a planned and executed industrial policy. We had an industrial policy at that time, which coincided with the rise of the military, whether through the bras (Siderbras, Eletrobras). Since then, we have not focused on this planning.

And industrial policy, like infrastructure or state policy, is never short-term. We had a lot of government politics. We need to create awareness that it is necessary to have State policies.

And the interest? Should the business community support the Lula government in criticizing the Central Bank? It’s easy to find economic theories to justify monetary policies A, B, C or D. But something we all agree on, even the president of the Central Bank, is that the real interest rates practiced in Brazil are unsustainable. It’s consensus. But what is the way to solve it?

It is obvious that I do not agree with the current interest rates in Brazil, but I also understand that we need to find the right way to discuss this matter and make a unison and safe move.

It’s not turning this into a clash and a political flag. Why don’t we sit down with all sectors of the economy and have a technical and serious discussion so that it doesn’t take on any political and ideological connotations, so that everyone feels comfortable? Today, the concept of holding interest rates is a concern with the inertia of inflation. There is certainly no demand pressure to justify this monetary policy.

In Brazil, we have a series of tools, such as the compulsory deposit, which can be used together, but it needs a reliable environment.

And the subsidies? Mr. Will you defend tax incentives to encourage investment in the North and Northeast, which is your region? The word subsidy has become very pejorative. Nobody complained about subsidy at the time that gave a big boost to agro, and today we have great admiration for agro. No sector in the history of Brazil was more subsidized than agribusiness at the beginning of its strength. Was that bad or good? But I don’t want to use the word subsidy. Incentives, more targeted funding.

So, let’s move on to the regional incentive, which is so much talked about in Sudene, Sudam, Zona Franca. We live in an unequal country, with significant gaps. And I don’t know of any way to treat unequals, other than unequally, to mitigate that inequality.

In the case of the Free Zone, it generates, according to statistics, an incentive and a [renúncia], which today is considered the largest of the regional sectors. But what is the logic of economic and social sustainability in that region today? Are we creating other alternatives for economic development?

We cannot think that we are going to take away, or fight against, an incentive that is given to a region to give a new economic and social growth bias without having an alternative.

There has to be planning and rationality and not just bravado. And since we are talking about the difficulty of reducing the Brazil cost and the cost of the public machine, on the other side of the equation, which are expenses, we cannot just look at how to collect more. Distortions exist and we can seek corrections. Fiscal balance has to be sought on both sides of the equation.

What we need now, in this neo-industrialization we are talking about, is to identify the windows of opportunity. Brazil has done little innovation, technology and research and development.

For that to happen, do you need measures to boost credit? What should the role of the BNDES be? The BNDES has been moving, I’m sure they learned from some past mistakes, but neither 8 nor 80. It is an actor to stimulate and drive economic and social development. It is not a simple bank to provide profit and results for shareholders. It is not a bank to make losses or do benevolence, but it is a bank to interact with public policies for economic and social development. Several lines are being studied, including in the areas of innovation and technology. We also need to create other areas focused on the circular economy, which is also a window of opportunity. It has strategic areas such as health and fertilizers. It goes through natural gas and our mining. We have a window to reduce the cost of energy, with wind and photovoltaics. It is fundamental to the cost structure of the country.

Let’s look at how things can be done without affecting revenue. There is nothing better for finding fiscal balance than economic growth.

Mr. Do you believe that tax reform will come out this year? We still have a government in the making of a political base. We have the most pressing need, which is the fiscal framework. There is an awareness in Congress that this needs to be resolved. It is difficult to predict what kind of political attrition and parliamentary grassroots needs will be necessary for this framework to reach a conclusion, what changes will be made and the final format. What political cost might this have? This may represent greater or lesser difficulty for the discussion of tax reform. In my view, it no longer faces major clashes in federal discussions, but still a little in the discussion of sectors of the economy.

And the Council? Small businesses felt underrepresented. What did mr. he thought? The Council is a concept of shared governance. I find it difficult to find convergences in such a large audience. How will the management be and how will so much diversity of people and concepts be filtered within a council so that it becomes effective actions, this will be a challenge for governance. Finding sectors that felt little prestigious, unfortunately, happens. There’s no way to please everyone. Let’s see the management.

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X-ray | Richard Alban, 63

Elected president of CNI (National Confederation of Industry) last Wednesday (3), Alban has been president of Fieb (Federation of Industries of the State of Bahia) since 2014 and president of Cieb (Center of Industries of the State of Bahia) since 2018 He is also vice-president of CNI for the term from 2018 to 2023, among other business representations. Graduated in mechanical engineering from the Federal University of Bahia and business administration from the Escola de Administração de Empresas da Bahia, he worked at Citibank in the early 1980s and, since 1987, has been managing partner of his family’s food factory, Biscoitos Tupy .