RIO DE JANEIRO: URBAN OPPORTUNITIES

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Recte Rempublican GerereGerindo a coisa pública corretamenteGood Management of the Public Good

RIO DE JANEIRO: RIO DE JANEIRO: URBAN OPPORTUNITIESURBAN OPPORTUNITIES

World Bank URBAN DAY 2008

Joaquim V. F. LevySecretaria de Fazenda - RJ

February 2008


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Welcome to Rio de Janeiro

Rio de Janeiro, Political and Financial Center

PROJAC – hallmark of the entretainement industry

A P40 oil plataform joining the oilprovince


Introduction

Strategy for selected sectors

Transportation

Economic Growth

Integrated GrowthPAC das Favelas

Entrepreneurship


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Rio de Janeiro: a “small open economy”

Source: CIA Yearbook, PIB US$ taxa de cambio oficial

P O P U L A Ç Ã O A R E A P IB U S $ B i lh ã oR IO d e J A N E IR O 1 5 .3 8 3 4 3 .6 9 6 1 3 9 ,3

A r g e n t in a 4 0 .3 0 2 2 .7 6 7 2 1 0 ,0 C h i le 1 6 .2 8 5 7 5 7 9 9 ,6 C o lo m b ia 4 4 .3 8 0 1 .1 3 9 1 0 6 ,8 V e n e z u e la 2 6 .0 2 4 9 1 2 1 4 9 ,9

C z e c h R e p u b l ic 1 0 .2 2 9 7 9 1 1 9 ,1 H u n g a r y 9 .9 5 6 9 3 1 1 3 ,2 P o r tu g a l 1 0 .6 4 3 9 2 1 7 6 ,8

M a la y s ia 2 4 .8 2 1 3 3 0 1 3 2 ,3 P h i l ip p in e s 9 1 .0 7 7 3 0 0 1 1 6 ,9 N ig e r ia 1 3 5 .0 3 1 9 2 4 8 3 ,4 S o u th A f r ic a 4 3 .9 9 8 1 .2 2 0 2 0 1 ,4

0 50 100 150 200

Nigeria

Philippines

Malaysia

Portugal

Czech Republic

Venezuela

Colombia

Chile

RIO de JANEIRO

PIB em US$ Bilhões

ERJ GDP in dollars is aboutthe same ofthat of Malaysiaor Colombia


Rio de Janeiro: an energy rich province

The new mega fields of Tupy andSaturn are off shore Rio de Janeiro

ERJ accounts for 80%+ of

Brazil´s oil and natural gas

production

Total Oil Production(million barrels per day)

5) Mexico 3.87) Canada 3.18) Norway 3.09) UAE 2.810) Venezuela 2.811) Kuwait 2.712) Nigeria 2.613) Algeria 2.114) Brasil 2.0

Rio de Janeiro 1.7

Top World Oil Producers, 2005*

Rank Country


PIB

100

300

500

700

900

1100

1300

1500

1970 1975 1980 1985 1996 2003

Índi

ce (1

949

= 10

0)

Brasil

Estado

RM

Capital

With important challenges

The metropolitan area hasstagnated in the last 30 years, with many industries leaving thestate

High dispersion of theHuman DevelopmentIndex, with seriousproblems around thecapital

IDH dispersion in Rio de Janeiro


Proporção (%) de população urbana em 2005

0

10

20

30

40

50

60

70

80

90

100

RJ DF SP AP GO MS MS PR ES SC SE RR RS PB AM MG PE CE PA RN TO AC RO BA MA AL PI

Brasil (82,8)

96,6

Fonte: IBGE.

Urbanization has taken a toll

1960 2000Conventional Areas 335 063 1 910 145Favelas 1 092 476 4 765 428Ratio 23,5% 28,6%

% population living in Favelas in Rio

State of Rio de Janeiro 807Regiao Metropolitana 816Belfort Roxo 742Duque de Caxias 753Itaborai 768Magé 746Nilópolis 788Niteroi 886Nova Iguaçu 763Queimados 732Rio de Janeiro 842São Gonçalo 782São João de Merity 774

State of Bahia 688State of Pernambuco 705State of São Paulo 820State of Santa Catarina 822

HDI - 2000

Note: HDI of Rocinha = 735Homicide Rates

Rio de Janeiro (2006) 57Washington D.C. 46Detroit 42Baltimore 38Chicago 22Johannesburg (2001) 75Moscow (2003) 20

Murders/100,000 people (2003)

Urbanization Rate


... in a complex institutional environment

State, municipalities and the Union are all “entities” at the same footing, even if they have different responsibilities and rights

States have the right to create Metropolitan Regions, but not much power to make them to work in a coordinated fashion • states don’t have fiscal or financial leverage

Financial crises reduced planning and infrastructure investment•decentralization reduced weight on planning in the 1990s• some reversals more recently

• e.g., pools-consorcios of cities• PAC negociated with states and cities

2006 elections brought new opportunities for cooperation at the city, state and federal levels and more emphasis on institutions in Rio de Janeiro


Introduction

Strategy for selected sectors in the ERJ

Transportation

Economic Growth


Entrepreneurship


Transportation is a key challenge

Forty years ago...

Now...

While transport demandhas changed dramatically, the rail system was stuckin the past

2008

ths pass. % totallocal bus 5.300 56%intercity bus 1.332 14%trains 500 5%metro 500 5%vans 1.600 17%other 250 3%


... that is being addressed

Paying for new air-conditionedtrains (WB loan and state money)

Repressing irregular ‘vans’, reducing money launderingopportunities

Enhancing the MetropolitanTransportation Agency (AMTU)


Goals: reduce transportation cost and improveservice

Investments in the Metro

It costs too much to travel in Rio´s Suburbs

> R$ 4,50

4,50 > 2,70

The subway will invest R$ 1,2 billion to double its capacity by 2011

Single ticket can smooth thetransition


Introduction


Transportation

Economic Growth


Entrepreneurship


The metropolitan region of Rio de Janeiro willbecome a prime logistic platform

PORT of Rio

Arco Rodoviário

70% of Brazil s GDP is within 500 km

PORT(Itauguai) and new Thyssen mill

Dutra

BR 040BR 116 Bahia

COMPERJ

Airport

MRS e outras ferrovias

Old Refinery


The U$ 8,5 Billion COMPERJ investmentshould not worsen urban conditions

0

20

40

60

80

100

120

São

Gon

çalo

Gua

pim

irim

Mag

é

Tang

uá

Mar

icá

Itabo

raí

Top

10

10 to

20

20 to

30

30 to

40

40 to

50

50 to

60

60 to

70

70 to

80

80 to

90

90 to

92

ESTADOCOMPERJ

% households with water in ERJ andin COMPERJ area

Expectation of 3,500 new jobs whenoperating and up to 200,000 jobs (directand indirect) in the next 5 years, part ofwhich during construction

Avoiding new slums and undue pressureon public services is a priority to thegovernment


Planta de Tratamento de Alegria – em construção desde 1995, deve começar a operar em março 2008

Forum COMPERJ is a key tool to urban planning

Forum COMPERJ is headed by thegovernor and includes

• most State offices• federal entities (Petrobras, CEF, Banco do Brasil, , BNDES, etc.)• muncipalities

• Coordinates efforts in the social, economicand environamental front• Holds regular seminars and meetings (e.g., February 21, with schollars, politicians, andthe civil society)• Organizes public contests to selectarchitectural and urbanistic projects• Ensures permament dialogue betweenregulators and businesses (e.g., Petrobras, Cedae, Environment)

01 02 03 04 05 06 07 08 09 0

1 0 0

São

Gon

çalo

Mag

é

Itabo

raí

Tang

uá

Gua

pim

irim

Mar

icá

Top

10

10 to

20

20 to

30

30 to

40

40 to

50

50 to

60

60 to

70

70 to

80

80 to

90

90 to

92

E S T A D O C O M P E R J

% households with sewage in ERJ and in COMPERJ area


Financial and Operational IndicatorsCEDAE SABESP COPASA

Market potential size (million 12,3 25 13,1Coverage (%)

Water 78 89 83Sewage 40 72 41

Tariff (R$/m3) 1,54 1,61 1,37Physical Losses (%) 49,7 35,8 23,9Market Losses (%) 30 11 13Total Assets(R$ million) 4.502 16.783 3.206Total net sales (R$ Million/year) 1.324 4.131 1.300Market Value (R$ million-2006) n.a. 7.404 2.323Ratings na BB (F); BB- naFonte: SNIS/Diagnóstico dos Serviços de Água e Esgotos – 2004

CEDAE will access the capital markets

• CEDAE needs to deal with municipalities, including those thathave privatized their services

• New sanitation law (2006) will require to accomodate manydemands, but still favors a strong, responsible statewide sanitationcompany


Introduction


Transportation

Economic Growth


Entrepreneurship


Private and public agents are eager to invest in thePort of Rio de Janeiro

Recte Rempublican GerereGerindo a coisa pública corretamenteGood Management of the Public GoodMANGUINHOS

Urban Renewal is needed and feasible

Manguinhos is a deteriorated area with an excellent location: PAC aims ate allowing the place to fulfill its potencial

Morro do alemão

PORTof RIO


Favelas don´t come cheap

Dwellings in Rocinha havemost modern homeappliances, but healthindicators are very badand garbage is a hazard

Favelas are a prime example of unbriddled capitalism: tall buildings and narrow streets. Unfortunately theirbase is schaky with poor property rights and informal enforcement of those existing


TELEFÉRICO – CONEXÃO METRÔ e ÔNIBUS

Renewal of Morro do Alemão will require a blend of new public equipment and more

security

metro

Bus trunkTeleferic

Lowering the cost of getting to work andmake the area accessible to health andschool services are top goals of the PAC

Success willdepend ongoodcoordintationbetween city, state andfederal government

Parque no alto do morro


Introduction


Transportation

Economic Growth


Entrepreneurship


First saleInovation

Lowering the cost of opening businessesrequires city, state and federal efforts

8.1

42.6

7.6

41.6

6.352.8

5.535.4

7.6

48.6

2.941.0

9.5

43.2

3.244.2

7.8

41.7

2.947.6

8.6

42.9

3.844.8

8.1

43.4

3.045.5

7.6

40.0

3.848.6

8.3

40.6

4.246.9

7.5

40.9

4.347.3

8.2

43.3

4.144.3

8.7

40.2

4.346.7

9.7

41.1

3.245.9

8.7

38.0

4.348.9

8.9

38.9

6.745.6

9.1

34.1

6.850.0

7.134.8

7.150.9

7.7

35.6

9.6

47.1

7.136.7

9.2

46.9

7.133.7

10.2

49.0

8.6

32.3

10.8

48.4

020

4060

8010

0P

erce

ntua

l

2005

m1020

05m11

2005

m1220

06m1

2006

m220

06m3

2006

m420

06m5

2006

m620

06m7

2006

m820

06m9

2006

m1020

06m11

2006

m1220

07m1

2007

m220

07m3

2007

m420

07m5

2007

m6

Nota: Dt 1pagmento - Dt JUCERJA - 30

88 dias

Proporção do Tempo Gasto pelo EmpreendedorMédio por Etapa do Processo (%)

Jucerja ContribuinteSefaz Municipio, contribuinte e outros

Waiting time is mostly at themunicipal level and idle time

Recently, the stateinnovated integrating the workof the trade board (Jucerja) with the tax bureau (Sefaz-RJ)

Time to get the state permitdropped to less than 2 weeks(average 2nd half of 2007)


[58.00,74.00](74.00,81.50](81.50,86.50](86.50,93.00](93.00,102.00](102.00,160.00]

Fonte: SAPP/SEE/SeFazNota: 2005-2007

Tempo gasto pela maior parte dos empreendedores por município

Next step: incorporate fire and other city permits

Use of the new streamlinedservice for state permit hadmore impact in the interior

Partnerships with Niteroiand Petropolis should kick offsoon

Integration with city taxdata has also been effectivewith respect to propertytransactions (e.g., ITD)

In doubt about where to locate yourself, chose Rio, which is business and user friendly.”

Lord Levene in 2008, when announcing that Lloyd´s will make Rio de Janeiro its platform for Brazil and SA

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Obrigado !

Niterói Campos Costa Verde

Teresópolis


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Rio de Janeiro, o melhor lugar para trabalhar

[email protected]


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