Brazil to Boost Defence Industry, Finance Arms Exports

Defence Sector to Receive Competitiveness Boost

(Source: Government of Brazil; posted Apr 04, 2017)

Embraer’s KC-390 transport / tanker aircraft, like other Brazilian- manufactured weapons, will now be able to benefit from an export financing, making them more competitive on the world market. (Brazil MoD photo)

The Brazilian government is preparing incentives aimed at boosting the competitiveness and international market presence of the country's defence sector. The announcement was made this Tuesday (4 April) by Defence Minister Raul Jungmann, who was speaking during the opening ceremony of LAAD Defence & Security 2017, a major event of the sector.

According to Jungmann, actions will include a line of credit from the Brazilian Development Bank (BNDES) to offer financing to countries that buy products from the Brazilian defence industry, insurance instruments for domestic manufacturers and a dedicated group in the Foreign Trade Chamber (CAMEX) that will exclusively address the defence industry.

"We need to create a specific policy for this sector, with robust instruments that can create greater efficiency in our trade relations," the minister said.

Jungmann said that the defence industry was the driver of a number of technological breakthroughs in history, such as GPS, the microwave and Teflon, adding that he believed the sector can contribute significantly to stronger economic growth. He explained that the incentives are necessary because the defence market is asymmetric between competing countries, and is not governed by the same World Trade Organization (WTO) rules like other sectors.

Defence sector exceeds R$ 200 billion in Brazilian GDP #Economyhttp://pic.twitter.com/GlM2HxOCg9

— Brazil Gov News (@BrazilGovNews) April 5, 2017

Finance Minister Henrique Meirelles also highlighted the sector's importance, and how it benefits from the structural changes taking place in the Brazilian economy. The weight of the sector in the Gross Domestic Product (GDP) exceeds R$ 200 billion, Meirelles said, adding that, in addition to generating income and at a higher pace than the Brazilian average, the area benefits industry as a whole.

"The defence industry is an important driver of new technologies and productivity in the economy."

The Ministers attended the opening ceremony of the 11th edition of LAAD, considered the most important conference in the Latin American defence sector. Held in the Riocentro Convention Centre in Rio de Janeiro, the event includes an exhibition by 600 different brands of several defence areas, including marine and aeronautics engineering, personal and tactical equipment, and military weapons, systems and solutions. About 150 of these companies are Brazilian, representing a sector that accounts for 3.7% of Brazil's Gross Domestic Product and generates 30,000 direct jobs.

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LAAD 2017: BNDES to Guarantee International Credit Line for Defense Products

(Source: Brazilian Ministry of Defense; issued April 04, 2017)

(Issued in Portuguese; unofficial translation by Defense-Aerospace.com)

RIO DE JANEIRO --- The president of the National Bank for Economic and Social Development (BNDES), Maria Sílvia Bastos Marques, announced on Tuesday while visiting LAAD - the largest and most important defense exhibition in Latin America - that the institution will guarantee a line of international financing from country to country, benefiting the production of the national defense industry, with terms of payment of up to 25 years and 100% of Brazilian exports.

"These are different from the usual exports because they are done on a country-to-country basis. What the Brazilian government is doing, in a coordinated way, with the Ministries of Finance, Defense, Foreign Relations and all other bodies involved, is to bring international competitiveness to our industry, "said the president of BNDES.

Ms Bastos Marques added that the financing arrangement can include a grace period for payment of up to five years before repayments begin.

In conversation with the journalists, Ms Bastos Marques took the opportunity to congratulate Defense Minister Raul Jungmann for the coordination that enabled the initiative to prosper. "The work was done jointly, but it was structured in favor of this industry that is so important for our Nation. The Defense Group created at the Foreign Trade Chamber will give the norms for the guarantees, and our intention is to structure financing line that is compatible with the international conditions," she said.

Minister Jungmann said that it could finance the sale to friendly countries of systems such as the KC-390 tanker-transport aircraft and the Guarani armored vehicle, in addition to diesel-electric propulsion submarines.

Brazilian President Michel Temer visited the show on Tuesday afternoon. Accompanied by Minister Jungmann and the president of the BNDES, President Temer toured the corridors of the fair, past the Embraer booths, where he received a small replica of the KC-390, and Saab, a Swedish company that is developing the Gripen NG.

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