Tax reform should guarantee the Northeast the ‘capacity to attract investment’, says Jerônimo Rodrigues

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Governor of Bahia commented on investments by the automaker BYD and criticized the proposal to create the ‘South-Southeast Front’, by the governor of Minas Gerais, Romeu Zema: ‘We cannot feed disputes’. Jerônimo Rodrigues PT Bahia Press Release At an event this Thursday night (17th) in São Paulo, the Chinese automaker Build Your Dreams (BYD) announced yet another investment in Bahia: a technology development and research center in Salvador, to work in a hybrid flex vehicle, to be produced in Brazil. No dates were disclosed for the opening of the technology center, nor investment amounts. The news, given by Tyler Li, president of BYD in Brazil, took everyone by surprise, including the governor of Bahia, Jerônimo Rodrigues (PT). We put some wishes of ours on the BYD table. And one of them was for the company to arrive in our country, in our state, and also invest in a technology, research and development center. “I expected this to happen, but perhaps information will be given later on. Maybe in October. It just arrived, a good surprise”, said the governor in an interview with g1. October is important, as it is expected that the entire process of transferring the facilities of the Camaçari Industrial Complex will be completed, with BYD replacing Ford in the production of cars in the state. The American company closed its operation in Brazil in January 2021. The government needs to compensate Ford for improvements made on the ground, with an estimated disbursement of between R$ 100 million and R$ 150 million. The number is not closed yet. From then on, BYD will be able to assume and carry out the BRL 3 billion of investments foreseen for the production of electric and hybrid vehicles in the country. Governor Jerônimo Rodrigues also commented on his misgivings about the tax reform. Ford settled in Bahia after receiving tax incentives from the state, and the possibility is extinguished with the new tax model adopted by the federal government. My short-term concern is that we can carry out a tax reform that serves the states of the Northeast, and guarantees our ability to encourage investment. Rodrigues also recalled some of the disputes that are at stake between the mayors and governors themselves during the course of the tax reform, and criticized the proposal to form a South-Southeast alliance in response to the articulation of the governors of the nine northeastern states, idealized by the governor of Minas Gerais, Romeu Zema (Novo). “The posture, for example, of the governor of Minas Gerais, it does not help us to think of a unified country, as Lula is preaching. We cannot, at this moment, feed any dispute between regions or between states. It’s not good for anybody,” he stated. See the main excerpts below. g1 – What does BYD need to start building the new factories in Camaçari? When does it start? It must be in October. It’s the deadline they gave us, which they would need to adapt internationally and guarantee the resources. In October, the company’s top management will arrive to make the announcements. For our part, we played our role in dialoguing with the environment where the factory with Ford will be installed. We will also assume responsibility for delivering the property, with a combination of infrastructure and the port in the region. g1 – What is still pending? Do you still have any problems with Ford? It’s just the investment term. The situation with Ford is already well arranged. It’s just details. In October, with the presence of BYD’s global directors, we will put to the table our expectation that production will be anticipated. Instead of the first car being produced in the second half of 2024, we are going to demand that you can anticipate some period. We know that the company has its investment policy. We will respect, but without failing to do our part to put this expectation on the table. g1 – The announcement that BYD is going to install a research and development center in Salvador took everyone by surprise, including the government. How do you rate the initiative? We had talked to BYD before. In the same way that BYD placed its wishes for incentives, incentives, infrastructure for the federal government and the state government — the company made a list of requests that the state and the Union could fulfill —, we work so that this happen. We’ve also brought some of our wishes to the BYD table. And one of them was for BYD to arrive in our country, in our state, and also invest in a technology, research and development center. So, I expected that to happen, but maybe information will be given later on. Maybe in October. It just arrived, a nice surprise. The arrival of BYD’s investments requires that we also leave behind long-term investments. Ford did it. Ford left Bahia in the industry part, but the intelligence part is still there. And it is important for the state to have the reference that in Bahia there is intelligence from Ford. We still believe that BYD can help, for example, by encouraging mineral research, as they want to lower costs and have a close raw material base. But we already have this initial initiative to adapt a hybrid car to a flex-fuel car and also one from diesel to biodiesel, which is a renewable fuel. Boletim Jornalismo: Ford factory in Camaçari is sold to the Government of Bahia g1 – Regarding the tax reform, the states lose the margin of tax incentives, which was what attracted Ford back there. Is the reform positive, since you have an industrial center to maintain? We have discussed, including within the Northeast Governors Forum, and more recently even with President Lula, Haddad and the team, that we have to be aware that the state and municipalities, including businessmen, may lose here or there. But, as a whole, the intention is that the reform can make the country win. Compensations will later take place. I am clear about that. It is clear that, as governor, each one will defend their states. But, if we stick with this view, we will make it difficult to develop a reform that embraces the view of the country as a whole. So, it is an aspect with two feelings: one of what the country needs, but knowing where we are stepping. Who is mayor, will look at the municipality. Those who are entrepreneurs will look at the benefits they will lose. But, overall, I think it’s a good step forward. Possibly, Brazilian society does not understand what tax reform means. If we translate it, saying that the basic food basket can be influenced, the Income Tax… People begin to understand. So, it is clear that from the taxpayer, businessmen and even governments, we have to have this culture that we need to move forward and mature. We are now inside Congress, already talking with the senators to find out how we can compensate for the losses. g1 – How would this be done? Through participation funds, as in the current proposal? What is the strategy to bring in investments? The ideal would be to have direct gains, which do not need to use the funds. The funds are compensatory, and we saw that, during a federal government that did not take care of this, the funds were emptied. Without being able to use the funds, states suffer. If we had our day-to-day tax earnings, we wouldn’t need to resort to that. Now the compensation needs to have. The posture, for example, of the governor of Minas Gerais [Romeu Zema], it does not help us to think of a unified country, as Lula is preaching. We cannot, at this moment, feed any dispute between regions or between states. It’s not good for anyone. The statement was wrong, it was a slip, but it is his thought. I understand that we need to look at the forest [os estados brasileiros como um todo]. And looking at the forest, I believe that we are now going to make the necessary corrections. It seems to me that, in the passage of the document [texto da reforma tributária] by Congress, it was not given due importance in the country as a whole. Many segments paid attention only from what happened in Congress. Let’s try to fix it now. Thankfully, the bicameral model gives us this opportunity to seek improvement in whatever is possible. But of course disputes happen. It is not the industrial sector that will determine what has to be done. You have to see what the regions earn, what one will earn more than the other here or there. And we’re going to work on that, so that we can recover at least that aspect. g1 – Industrial entities say that an attractive alternative could be investment in infrastructure, logistics, professional training. Do you think this is a way out? Yes, but it’s a long way out [de longo prazo]. When am I going to work on a training chain for professionals that is suitable for this type of industry? [automotiva, no caso da BYD], the result is for the medium or long term. So, we have to do both things: whatever needs to be fixed now to be able to see the dynamics in the economy happen, and work in the long term. We still don’t have, in the country, a university structure, of student centers, that can generate a good environment in a short time. Our request in relation to the tax reform is that the states that have a deficit in investment in infrastructure, in logistics, can be observed by the Union. You need to look at the states that have a strong potential for growth, such as São Paulo, but also look at for the existing poverty, for the difficulty of infrastructure and logistics. My short-term concern is that we can carry out a tax reform that serves the states of the Northeast, and guarantees our ability to encourage investment.

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