Lula government’s industrial policy rescues inducing state

The government announced this Monday (22) its proposal for the “reindustrialization” of the country for the next ten years, foreseeing initial investments of R$300 billion for financing destined for the new industrial policy until 2026.

The project, called Nova Indústria Brasil (NIB), uses concepts such as “neoindustrialization”. But, in practice, it seeks to rescue the State’s role as an inducer of industrial development, a policy experimented with in previous PT administrations, through lines of credit, subsidies, local content requirements and priority given to national companies in government purchases, even if at higher prices.

The resources will be managed by BNDES, Finep and Embrapii and made available through specific lines, with lower interest rates.

Organized within the Mais Produção Plan, the credit lines are aimed at productivity, innovation, green economy and export projects. Within the program, R$20 billion are non-reimbursable resources, especially aimed at the areas of health, science and technology.

Some of these initiatives are already underway. For the More Innovation program, BNDES and Finep are allocating R$66 billion, of which R$40 billion is in credit, with interest equivalent to the Reference Rate (TR) plus 2% per year.

The idea is to reverse the so-called “deindustrialization” of the country through State induction, with the implementation of special credit lines, non-refundable resources, regulatory and intellectual property actions, in addition to a public works and procurement policy, with incentives for local content.

The document was presented by the vice-president and minister of Development, Geraldo Alckmin, at an event at Palácio do Planalto. “Reindustrialization is innovative, it is green, it is sustainable, it is exportable and it is competitive”, stated Alckmin in the presentation.

Ministers and members of the Lula government countered criticism regarding the central role of public authorities in the new industrial policy.

The president of BNDES, Aloizio Mercadante, cited China and the United States as an example of guided and driven economies that have good results. “I want to ask those who write every day saying that we are bringing old measures. Explain to me China, explain to me why China is the country that grew the most in the last 40 years and this year 5.3%. Explain to me the economic policy American, 1.9 trillion dollars, subsidy, incentives”, said Mercadante.

In his final speech, President Lula emphasized the need for a new relationship with the private sector. “We need to make Brazilian businesspeople believe in Brazil a little, “I have very sad experiences. There is a businessman who I went to open his factory with, with great pride. A year later, I found this businessman importing the product he was going to manufacture from China… I was very nervous, very irritated,” said the president. “Often, for Brazil to become competitive, it needs to finance the things it wants to do. wants to export”, he added.

National companies will have priority in government purchases

National companies will be provided with credit lines with favorable conditions so that they can take on works under the New PAC. They will also have priority in government purchases.

A decree signed by President Luiz Inácio Lula da Silva (PT) this Monday (22) defines areas that may be subject to acquisition requirements or have a margin of preference for national products in bidding processes.

The government must also give preference to national or local manufactured products and services, even if the price exceeds that of competing imported items by a previously defined percentage. The Interministerial Commission for Innovations and Acquisitions of the New PAC will define the manufactured products and services of the chains that will be subject to the decree.

In the past, the requirement for high percentages of local content in industrial production did not produce the expected results. Especially in the oil sector, which ended up generating extra expenses for companies like Petrobras. The state-owned company failed to comply with the minimum limits for purchases and ended up being fined.

Plan defines six priority areas with goals until 2033

The plan defines missions, goals and guidelines for the ten-year period, until 2033. The missions are linked to the sectors of agroindustry, health industrial complex, infrastructure, sanitation, housing and mobility, digital transformation, bioeconomy and defense technology. In each of the areas, the plan brings different references to be pursued.

For agroindustry, the target is a 50% share of agricultural GDP. Currently, the segment corresponds to 23%, according to data from the 2017 Agricultural Census. Family farming establishments must reach 70% mechanization, that is, almost quadruple the current figure, which is 18%. Furthermore, 95% of these machines must be produced nationally, with priority given to equipment for precision agriculture and agricultural machinery for large production.

In the area of health, the plan foresees that the country produces 70% of the volume consumed internally with medicines, vaccines, equipment and other inputs and technologies. National production currently accounts for 42% of the country’s needs.

The new policy also set targets for sustainable infrastructure, sanitation, housing and mobility of big cities. One of them is to reduce the time people travel from home to work by 20%. Currently, this time is, on average, 4.8 hours per week in the country, according to the IBGE National Health Survey.

In the same area, another goal is to increase the participation of Brazilian production in the sustainable public transport industry chain by 25 percentage points, focusing on electromobility. In the electric bus chain, for example, national production represents 59%. The battery production chain and the metro rail industry and investment in digital and low-carbon civil construction are also priorities.

A digital transformation of national industrial companies is an area of ​​attention. The goal is to increase the percentage of digitalized companies from 23.5% to 90%, in addition to tripling the share of national production in the new technology segments. To this end, investment in the development of digital products and the national production of semiconductors, for example, will be a priority.

Focusing on bioeconomy, decarbonization and energy transition and security, the plan’s target is for the participation of biofuels in the transport energy matrix to be 50%. Green fuels currently represent 21.4% of the matrix.

With the use of biodiversity by industry, it is expected to reduce carbon emissions from national industry by 30%, currently 107 million tons of CO2 per trillion dollars produced. Priority investments will be in the production of bioenergy and equipment for generating renewable energy.

In the area of defensethe idea is to obtain autonomy in the production of 50% of technologies by 2033, in addition to defining instruments for financing and guarantees in exports of defense products and resources for space development.

Priority will be given to actions aimed at developing nuclear energy, communication and sensing systems, propulsion systems and autonomous and remotely controlled vehicles.