The Pecém Free Trade Zone (FTZ), in the state of Ceará, was inaugurated last week. It is the first free trade zone to go into operation in the country. The Pecém FTZ integrates the Pecém Industrial and Port Complex, in the municipality of São Gonçalo do Amarante, around 60 km from Fortaleza. Installed in an area of 4,271 hectares, the industrial complex is a major project that is to house a steel plant, port, railway, pipeline, two thermal power plants, and a refinery, among other industrial facilities. According to Gustavo Savoy, the Executive Secretary of the National Council of Free Trade Zones (CZPE), the inauguration is an important step towards the consolidation of the FTZ model in the country. “With the establishment of the first free trade zones in Brazil, our exporters will have another mechanism to boost the competitiveness of their products in foreign markets and add value to exports. The FTZ is also a tool to attract new investment and create jobs,” said Savoy.
The Pecém FTZ was proposed by the State of Ceará and created by means of a presidential decree in June 2010, after approval from the National Council of Free Trade Zones. Before establishing the FTZ, technical criteria were assessed including the orientation of the enterprise to the foreign market, the project’s contribution to regional development and technological diffusion in the country, adaptation to local services and infrastructure, and economic and financial feasibility, among other prerequisites established by CZPE Resolution No. 5/2011.
Afterwards, with the publication of CZPE Resolution No. 4/2011, the first industrial project for the area was approved – the Pecém Steel Company (Companhia Siderúrgica do Pecém), currently one of the largest industrial projects under construction in Brazil. The Pecém Steel Company is to be an integrated facility for the production of steel slabs for export, with an estimated investment of R$ 9 billion. According to information provided by the shareholding companies (Vale, Dongkuk Steel and Posco), the installation is expected to have significant impacts on regional development. Indicators show a potential 12% increase in the total GDP of the state of Ceará and a 48% increase in the state’s industrial GDP. By 2015, during the construction phase, approximately 23,000 direct and indirect jobs will be created. In the first phase of plant operations, 4,000 new jobs are expected to be generated.
The Pecém FTZ is being completed in two stages: the northern area (1,166 hectares) and the southern area (3,105 hectares). In the first phase, already bonded by the Brazilian Federal Revenue Service, infrastructure works, required under the responsibility of the State of Ceará, were completed. A segregated area was also established for the FTZ management company, the Federal Revenue Service and other authorizing agencies. In addition, construction works are ongoing for the Pecém Steel Company. The second phase is focused on the FTZ expansion area.
In addition to the Pecém Steel Company, the installation of the company Vale Pecém S.A. in the Pecém FTZ was approved in December 2012, with initial investments of approximately R$ 96 million for the acquisition of capital assets and construction works. The company will create 172 direct jobs, requiring medium-to-high technical qualifications. As with the Pecém Steel Company, Vale Pecém will fill most of these positions with regional or local labor.
Free Trade Zones
Free trade zones are areas allowing free trade with other countries, intended for the establishment of companies focused on the production of goods to be exported, and are considered primary zones for the purpose of customs control. Companies that establish themselves in an FTZ have access to specific tax, foreign exchange and administrative treatment and are required to primarily be an exporter. Specifically, companies must earn and maintain gross revenues from exports which should account for at least 80% of their total gross revenue.
There are currently 24 free trade zones in different pre-operational phases, distributed across 20 Brazilian states. Five of these are in an advanced stage of completion: Ceará, Acre, Piaui, Mato Grosso do Sul and Mato Grosso. The first two have already received authorization to operate from the Federal Revenue Service (customs area).
Source: Ministry of Development