BRazil's president Michel Temer

President Michel Temer will propose legislation to lift restrictions on foreign ownership of airlines and agricultural land in Brazil as he strives to pull the economy out of a two-year recession, government sources say.

Temer’s centre-right government plans to send Congress a bill allowing 100 per cent foreign ownership of airlines, though investors will be obliged to help expand regional flight services, two sources said.

The government will soon propose a bill lifting a ban on foreign investors buying agricultural land in Brazil, on the condition that 10 per cent of any purchase is destined to land reform to benefit landless farmers and peasants, said a presidential aide who was not authorised to speak on the matter.

Temer in 2016 vetoed an aviation bill that would have allowed full foreign ownership of local airlines in an agreement with senators who wanted inclusion of measures to boost regional aviation. The new draft will do just that.

“The initial idea is to reopen regional routes that were abandoned so that they get regular flights again,” a source with knowledge of transport policy said on condition of anonymity.

A comparison of air traffic: there are 460 airplanes servicing the whole of Brazil as opposed to over 5000 airplanes servicing the USA.
A comparison of air traffic: there are 460 airplanes servicing the whole of Brazil as opposed to over 5000 airplanes servicing the USA.

Foreign companies currently can hold up to a 20 per cent stake in Brazilian airlines. US carrier Delta Air Lines has 9.48 per cent of Gol Linhas Aereas Inteligentes SA , Brazil’s largest domestic airline.

Counting international routes, the main airline operating in Brazil is TAM, which merged with Santiago, Chile-based Latam Airlines Group SA to become Latin America’s largest carrier.

Two other carriers, Avianca Brasil and Azul Linhas Aereas, are controlled by foreign owners with Brazilian citizenship.

Attracting investors to buy into Brazilian airlines might not be easy due to jet fuel taxes and falling domestic traffic due to the recession. Despite huge market shares, Brazilian carriers have struggled to make a profit.

Plans to open up land to foreign purchases again, however, are bound to draw plenty of investors in Brazil’s expanding agribusiness industry that is seeking new partners.

Brazil restricted the sale of land to foreign investors in 2010 due to concerns that countries such as China could take control of large segments of arable land in the midst of a super commodity boom.

Companies in Brazil’s commodities sector have pushed to review the rules to allow more investment to flow into the country, especially in the pulp, paper and ethanol sectors.

SOURCECourier Mail
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Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.

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