Small Industries Believe that Brazil is at Serious Economic Risk

By Richard Mann, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The industrial syndicate representing micro and small businesses (MPI), responsible for 26 percent of Brazil’s industrial Gross Domestic Product (GDP), criticizes the fact that the Bolsonaro government has not yet made progress that would help its activity, such as lower interest and taxes, reduced bureaucracy and permitting installment plan debt.

Moreover, it believes that the country is at severe economic risk. If the Social Security and tax reforms are not approved within the next 90 days, it will be “better to turn around and leave”, said Joseph Couri, president of SIMPI (Syndicate of Micro and Small Industry of the State of São Paulo) and ASSIMPI (National Association of SIMPI).

He criticized the fact that the Bolsonaro government has so far failed to make progress on a microeconomic agenda that would permit removing the obstacles hindering the expansion of Brazil’s domestic industry, which must compete on an equal footing with the rest of the world.

As in other sectors of the economy, Couri pointed out the ways to overcome the challenge:

• Lower and more competitive interest rates;
• Access to credit at international and long-term levels;
• Reduce the tax burden (today at 32 percent of GDP);
• Reduce bureaucracy;
• Legal security and clear rules;
• Promoting production;
• Tax simplification.

Brazil ranks among the seven worst countries in terms of tax payments. In Latin America and the Caribbean, the country only outperforms Bolivia and Venezuela, according to the World Bank.

The president of SIMPI and ASSIMPI also said that entrepreneurs expect the government to approve the proposal for a debt installment payment plan with the federal governmet, which today amounts to R$2.2 trillion (US$550 billion), according to data from the National Treasury Attorney’s Office (PGFN).

“The proposal is for micro and small industries to pay 0.5 percent of their annual revenues until they pay off their debts. It is already in the hands of the government, but so far we have not received any response, although I believe it is in the interest of the government itself,” said Couri.

He stated that a survey commissioned in April by SIMPI to Datafolha showed that 40 percent of MPIs have fewer workers than a year ago. Only nine percent of them had hired workers, and 51 percent maintained their payroll unchanged since early 2018.

The survey also shows that entrepreneurs who believe that the country’s economic crisis at the moment is still strong, that it greatly affects business, and it is not foreseeable when recovery will come — increased from 32 percent in February to 41 percent.

In Couri’s opinion, if Congress does not approve the Social Security and the tax reforms, or even the supplementary credit that the government needs to close its accounts, Brazil will plunge into a recession as never seen in the last two decades.