Given
the importance of Brazil's domestic geo-economic expansion,
investment-auto-motives has tentatively explored the topic of
regional and national planning.
With
obvious interest in the lessons learned from the West, from the
chaotic expansion of Medieval times, the grande re-planning of the
early to mid Enlightenment period (ie Wren's London, Haussmann's
Paris) and throughout the 19th and 20th
centuries with the rise of properly planned but still humanistic and
organic 'balanced environments' per the Garden Cities ideology and
its contrast to the geo-metric and harsher Modernist approach seen
with post-WW2 'New Towns', aswell as the Post-Modernist efforts to
once again create blended multi-use environs to ensure 24/7 activity.
All
aspects seen as infusing the archetypical EM Mega-City.
And
of course also lightly viewed have been the experiences of Brazil's
and others efforts to create anew, from Kubitchek's Brasilia (which
sought a co-axial of 'modernist monumentalism' and 'humanistic
habitation), to the recent efforts toward fully fledged eco-cities
such as the UAE's Masdar.
Yet
cities old and new, and separate industrial-service centres from
ports to business parks, all require physical and digital
connectivity between and within.
But
beyond this typically regional-centric approach,
investment-auto-motives believes that – after the chaotic rise of
olde-worlde AM environments in which the urban battled the rural
leading to innate planning compromises, Brazil given its scale and
remaining potential could be the first country to become sensitively
'nationally re-planned' at the distinct physical and digital levels
and crucially at their own 'co-axial intersect'.
…..............................................................................................................................................
The
extremely important issue of infrastructure was addressed by a small
but informed panel, drawn from diverse investor and operator
backgrounds.
As
previously [investment-auto-motives' comments follow in parenthesis
paragraphs].
The
Panel:
Joe
Leahy – Chair – FT Journalist
Georgina
Baker – VP Int. Finance Corp. (LatAm-Caribbean/Europe/Central Asia)
Joe
Kaeser – CEO and President of Siemans AG
Rodolfo
Spielmann – Head of LatAm – CPP Investment Board (Canada)
Marianna
Luz – Head of Embraer Foundation & Head of Sustainability at
Embrear Aerospace
The
session started with a small joke about the time taken in traffic to
reach the summit, and mention of the fact that Brazil itself is the
paradox of small clusterings of great infrastructure – typical of
specifically dedicated satellite towns – against the broad backdrop
of far poorer regional and national infrastructure.
“Overall
Brazil's infrastructure is quite 'patchy', the WEF's rankings
illustrating Brazilian infrastructure at 73rd against its
overall rating at 80th. Look closely at the topic and its
ranking is increased thanks to string availability of flights and
telephone services. But roads, ports and railroads actually rank
beyond 100.
The
first question posed...
“How
can a high quality, high-resilient 'pipeline' of infrastructure be
financed?”
Georgina
Baker -
“The
IFC has been operating in Brazil/LatAm for many years, but recently
we've been looking to see how to involve the private sector, namely
institutional investors...and so created a programme for 3 large
insurance companies whereby each provides $0.5bn to follow IFC's own
investments. This based upon the recognition that certain
areas/sectors were to be avoided. This was a big deal for such
companies that known OECD Infrastructure well, but not elsewhere, so
'nervous' about EM markets. So when alongside IFC much more
comfortable.
[The
apparent 'ignorance' of such highly regarded and well resourced
insurance companies is surprising, given the 'maturity' of many EM
markets over the last 25 years, and the enormous current and future
pensions obligations to their largely (high payout) European
client-base. It was assumed that though historically conservative,
these firms would be more advanced regards EM differentiation and
understanding than they appear; though obviously very mindful of
specifics of national and regional socio-economic and so political
instability ].
“For
the most interesting thing was the 'demonstration effect', where they
can come with us into certain markets...and once done with us they
will do it on their own and bring others behind them; and that is the
most fundamental breakthrough that we've had. They too can do that.
Joe
Kaeser -
“To
attract such infrastructure needs a plan and that plan must be set
forth by the government. What is my Energy Agenda?, Mobility
Agenda?...How to efficiently transport people and goods?...and the
financing will come because there is so much money in the world, and
all the large institutionals are dying to invest. But there has to be
a plan for Localisation, Innovation, Social Development, and that has
been the recent 'Brazilian Challenge' whilst (the gov't) has been
busy with other things.
China
has a plan and its been expanding throughout Asia and Europe with the
'One-Belt' initiative.
India
has a plan, even if Modi has faced some problems. So the BRIC
'tail-end' works well, but the front (Brazil, Russia) needs to catch
up. Hence our signing of an agreement with us and the Brazilian Gov't
very recently to develop the country. How can OEMs help with
localising and efficiency...and then they will come...because
investing in infrastructure causes inflation (and so growth). And
that's what you what in pension funds' assets [AUM].
So
we need a plan for Brazil. It will bring [further] industrialisation
because Brazil has an interesting 'token' above and beyond 220m
people and young people etc; Brazil's got natural resources. So
Brazil sits at the very beginning of any industrial value-chain, and
you build the next level of the value-chain.
[This
has been well understood for over a century, and shown to have been
prominent in the attraction of FDI since the 1920s with Ford, GM,
Chrysler and later in the 1950s Volkswagen, and 1960s Renault, Simca
and the effective domestic JV that was Alfa-Romeo/FNM. So whilst
hardly a new notion, well worth repeating given the enormous
commercial 'activity span' Brazil can undertake. Herein we see that
it is well placed to be the physical provider and later digital
provider of 'the Internet of Things'.
“Germany
cannot do that...so we look elsewhere...and the Government must put
the plan in place”.
The
Chair restates the importance of the MoU between Siemans and Brazil,
then brings in another
Rodolfo
Spielmann -
“We
are LatAm infrastructure investors with roughly $6bn invested,
starting in Chile in 2006 with assests still owned today...then into
Peru and Mexico and last year within Energy in Brazil. This is just
scratching the surface regards what's needed There are good examples
to study, such as Australia, which did 3 things well:
1.
Create a pipeline of scalable projects, beyond the short-term and
bringing together different Ministries (Transportation, Natural
Environment, Finance, Planning and Energy)..all behind a common
agenda...across different sectors across different industries...one
common goal far into the future. Its got to be the conviction of the
whole political class across political parties.
2.
These assets have to be available in a 'de-risked' manner, typically
not 'green-field' which includes too many risks during the initial
development phase. So we like brown-fields, which become brown from
green after perhaps only 2-3 years, and we stay thereafter for
decades. For those companies, they then receive our money and that
allows them to develop the next set of projects. They have a higher
return, but based on higher risk of course. And that's a nice concept
of how to use different pools of capital for different phases.
3.
Stable Regulatory Environment. This doesn't always happen and needs
strong independent regulatory bodies (little influenced by political
schisms).
“These
3 items are easily said, but difficult and necessary to act on...the
'guiding lights' to see in EMs'.
“As
per the 'infrastructure pipeline' their can be different financing
sources...(capital markets listed) privatisation, or new concessions,
or specific co-party private treaties, asset sales by State Owned
Companies (eg Petrobras). And of course there's the new development
'green-fields'.
[This
illustrates the 3 investment rules CPP operates within, but there are
obviously a plethora of other analytical macro and micro economic
measures and broad PESTEL analysis, each with different model
weightings, and most likely attempts at 'scenario analysis'. In
effect 'investment safety' per country by country variations in trend
continuums between 'diminished-socialism' (eg Cuba) and much
increased 'free-enterprise' (eg Mexico) so as to gauge operational
risks and if very necessary plans for country or sector exit].
“To
give a example in Chile, we have an investment in a Toll Road
company, and within that company there is a potential new projects
department which evaluates where potential new infrastructure could
be created. A presentation is given to the government and then an
open Tender to interested Operators. There is the possibility that
the originating corporation may not win that Tender, in which case
they are compensated for the costs of drawing-up the concept plans
and schedules. So there is incesntive for private parties to propose
projects even if they might not win the contract.
Mariella
Luz -
“As
regards the 'infrastructure pipeline' I begin with the sustainable
part of it, especially aboout the need for retrofitting and upgrading
and yes that needs finance. We have been developing sustainability
commitments between government and industry to make such processes
possible, and bring the efficiency we need to these processes.
“Within
aviation there's obviously potential for much, with specific
potential in air traffic and control systems. You (to Leahy) spoke
about the problems in getting here, but that's a problem we all face
as passengers on a flight when forced to circle above the
airport...that's about infrastructure...and that delay affects both
the person directly and the environment [ie burning fuel] and so has
a sustainability impact. By overcoming such problems we could have a
more cost effective airport, more energy efficiency and greater
well-being. So its about sustainable development and equitable
services.
The
Chair asks why investors might be nervous about EM projects...”what
are the reasons?”
Georgina
Baker -
“If
you know how to operate within OECD markets but unfamiliar with
others, you may not know how to assess Credit Risk, Market Returns,
Asset Allocation. Its easier to stay where you are. But if you
partner with IFC [implicity familiar because of 'boots on the
ground'] we help look after that money because its a shared risk.
Whether Mozambique, Angola or Brazil, these are risks we understand
well. Governmental and institutional stability is key, and there has
been instabiility, but the 'we' has always been there.
“We
say to those (the big pension groups) providing $0.5bn...'let's
imagine if you had invested 5 years ago or 2 years ago? And we
played-out what their portfolio would have looked like. We invest
slivers over time and projects, so its not like putting big lumps at
risk in one or two projects. But if you have a portfolio of say 80
projects in 30 countries the risk is minimised. Unlike my panel
colleague who invests in already performing brown-field, we invest in
green-field where risks are higher but that is our strength. We
deploy Performance Standards that include Sustainability to ensure
conservative client companies will not be exposed to too much risk
and won't be on the newspaper headlines.
[The
raison d'etre of IFC's existence is indeed to quell large
institutional fears about EM issues, so it seeks to offer confidence
about individual country knowledge, the need to de-risk an
infrastructure portfolio via holdings spread, the need to drip-feed
investment on a phase by phase basis so as to both support the
project and indeed limit exposure if macro or micro problems occur
and recognition of the great CSR obligation upon societally important
pensions and insurance institutions.
As
such the answer was expectantly formulaic and a partial PR exercise
for IFC, but illustrates to the uninitiated about how the accrued
paper and cash profits such large institutions hold, and a portion of
the current payments received (the 'float') from AM countries are
channelled toward EM regions].
The
Chair asks Spielmann if CPP's “brown-field” development mantra is
sacrosanct?
Rodolfo
Spielmann -
“Its
a little more nuanced than that...we will expose ourselves to a
fraction of the available green-field, but we don't for now invest
completely in a singular project. Our method is to focus on
brown-fields and asset-recycling so providing capital to others for
the next green-field and we become interest when that becomes
'brown-ish'. But our Chilean experience [because of the format of the
regulatory/policy system that encourages forward planning] means we
have a broader appreciation that pure brown-field.
Joe
Kaeser -
“This
is all about opportunity...and greenfield often requires a
public-private approach. The best outcome is an alliance between
government, finance and constructor-operator (or constructor them
operator). Then you have the knowledge to execute either as
brown-field of green-field, a regulatory body that ensures the
investment climate remains comfortable. Hence my words earlier,
there's got to be an economic development plan that extends over the
lifecycles of governments and that of the general economy.
“Across
LatAm, Chile appears to be ahead of the crowd, with Argentina still
fluctuating, and Brazil at the beginning of a new era. It could well
take off if a public-private investment mentality prevails; since
both private enterprise and indeed state firms are effectively
waiting for permission with eagerness. So I am comfortable with the
the capabilities, spirit and power of this country. But there is a
lack of a long-term vision and plan.
“But
it's also about SME's too build them up, so we have a broad base of
economic development, not just a few Petrobras or Embraer etc. And
that needs a plan, and 'everyone will come'.
The
Chair interests by highlighting the instability that creates ever
changing plans, such as the Energy law about electricity
“Yes,
but the customers don't change and so you have to have sustainable,
reliable, affordable electrical power....and everyone talks about
'automation' and 'the internest of things' but its all crap if you
don't have electrical power and reliable logistics. It all becomes
ludicrous if you can't beuild a factory in a meaningful way.
“And
as for the energy debate...Brazil had renewable energy before people
even used the term, which is Hydro...which works even if the sun
doesn't shine and the wind doesn't blow.
[Kaeser
effectively puts things into perspective about the importance of
Hydro-electric power to Brazillian activity. This recognised since
the late 19th century and vital to the regional planning
that underpinned the FDI efforts to attract FIAT manufacturing
investment in the late 1960s].
“The
issue now is climate change, and that effects waterflow and
quantities. And the attractiveness of investing comes with
efficiency...asset management. We have to make it happen and not talk
so much about what could have happened or should have happened.
The
Chair asks about the “bottle-neck” challenges
“It
took time in Germany to convene a stable government, but here in
Brazil I hope it happens quicker because we need firm government
plans and multi-stakeholder discussions regards a B2G (Business to
Government) and a G2G plan. Come with a 20Gigabite plan, a 5000 Km
grid optimisation plan, a 10,000km roads plan, an urban mobility
plan. Its not rocket science to put railcars underground and make
traffic work.
“And
contain the root causes of inflation, interest rates can be raised
but it will kill the economy if the root cause of that inflation is
inefficient operations (so necessitating higher transactional costs).
The time taken to get goods to the customer is key, and if a large
percentage of food is rotting en route to the end user it raises the
price of the received goods even more. All this has nothing to do
with interest rates, but about efficiency.
It's
about a convergent approach to get it done, and there's enough money.
Georgina
Baker -
“It's
easy to say there's enough money, but the majority of that money
comes from the government and it must rationalise its infrastructure
spending versus its national indebtedness.
[This
is a central point since invariably the onus to retain national
sovereignty means typicaly a far greater portion of funds originates
from government. And – as illustrated in previous weblog posts -
Brazil currently has a higher Debt to GDP ratio than its BRIC peers.
However,
arguably though not as economically powerful as India or China, it is
arguably further advanced regards its general economic base as a
consequence of its full value-chain – thus is a much advanced EM.
This
suggests that with greater value creation capabilities it could
maintain or expand its national debt levels to finance the obviously
much needed infrastructure projects that would serve all the country
and especially long since under appreciated inland regions.
A
well considered balancing act between maintained national debt and
perhaps greater new private investment than the historical norm,
would be the best path forward].
Joe
Kaeser -
“I
wouldn't expect the government to solve everything and especially the
problems of the private sector. There has to be a long lifecycle
framework that allows the private sector to invest. I'd be happy to
invest a billion Euros tomorrow if I had a roadmap, and that billion
would be matched over again by private equity or pensions company
anywhere in the world. That becomes a ten billion Euro fund but there
has to be a framework to allow the private sector to get on with the
operational task of making it happen.
Rodolfo
Speilmann -
“I
agree, conventional infrastructure offers much, almost all
sub-sectors profitable in themselves, the exceptions being marginal
projects such as certain green-energy - like solar -which means
marginal returns presently and so discouraging. We've just taken on
wind-farms beyond airports and ports. It is profitable.
“Together,
institutional funds and Sovereign Wealth Funds amount to $7 trillion
of investments, and yes most are government bonds, but we have long
horizons regards (infrastructure) equity. Our partner is a pension
fund and we are still receiving both new funds (for AUM) and the
(dividend and capital) returns, both of which need to be re-invested.
“So
its less the availability of capital and much more prescient the
availability of projects.
Joe
Kaser -
“The
common thread between all the countries which are expanding and
developing is that they have a solid infrastructure plan to do so,
such as a target to install 10 Gigawatts over 5 years; and then they
went to auctions (Contract Tender Auctions)
“So
how about we (addressing Spielmann) present such as plan for NE
Brazil: 5 GigaWatss at 3 cents per KW/H ? This is 'putting the potato
on the fork' as they say. You need to be clear, specific, precise and
not just try to save the world by talking.
The
Chair highlighted the fact that Brazil has had plans, such as
Dilmar's 'Growth Acceleration Plan', but they change. And there's
BNDS [the government owned lending institution, whose remit has
altered recently to become more commercial and long-termist].
Inflation is low at the moment but it could be a cyclical low. How to
solve that problem? [ie BNDS's slow transformation into an as yet
unclear entity].
[investment-auto-motives
previously provided a very detailed graphic of how BNDS historically
fitted into the country's top-down financing structure alongside its
prime educational-research centres; to provide overview of the
'privatisation potential' on a sector and company basis].
Rodolfo
Spielmann -
“BNDS
has changed to align to market rates [not the deliberate low-rate
loan provider it previously was], and not necessarily fund the big
national champions that can access international finance. So it could
finance the botttle-neck projects such as green-field, or 'frontier'
new companies, or SME long-term financing. That could be the vision,
similar to the German Re-Construction after WW2.
“But
the long-term finance has to come from international investors, and
that $7 trillion doesn't include Insurance, Banks and Private Equity
could provide. And the capital markets themselves can be further
developed, with Infrastructure Debentures slowly growing in volumes.
Then the government need not put much money in, just provide tax
incentives and other similar policies.
Joe
Kaeser -
“You
must be sure about the 'take-up' by such parties to 'close the loop'
and crystallise the process. There are thosands of examples around
the world.
Georgina
Baker -
“But
you also need to be assured of the strength of the local financial
and legal systems.
The
Pru (Prudential) has been working on this for 20 years so that
foreign investors are treated the same as local investors; access to
the same tax regime etc.
And
thus far in LatAm over 30 projects in the Transport sector achieved
recently because FDI at last believed they would be treated exactly
the same.
[The
issue about local market strength is critical, since this effectively
both underpins and is affected by the modus operandi of the
national/regional legal system.
Also,
China's recent announcement regards the opening-up of its auto-sector
to FDI – without the need for a JV Chinese partner firm five years
from now – appears an important milestone for the BRICs (presently
excluding Russia) and CIVETS etc, and should encourage further sector
and FDI liberalisation].
“We
need to move away from 'just having a plan'. If just planning was the
problem it would have been solved by now. It must be recognised [for
all the positive chatter] that many EM projects are not viewed by
OECD-based institutions as 'investment grade'. The regulatory regime
of the institutional investor is important. My experiences of working
with French and German investors is that their own domestic
regulations require that all their investments worldwide be
'investment grade'. Most EM projects do not meet this criteria, so
you have to bridge that gap.
Joe
Kaeser -
“But
doesn't having a plan also mean knowing how to run your country? This
including the legal system meet international dispute standards. This
is what I mean by plan.
[This
was not made explicit or implicit previously, and it took Ms Baker's
comments about a lax or problematic or unenforceable regulatory -
critically important issues – over half an hour into the
discussion. This is the EM problem between the ever amazing potential
and the historical economic pitfalls and now much of these tamed, the
present-day real-world business environment.
Bodies
such as the UK DTI's International Trade agency promote the potential
of EMs – such as LatAm expansion for Land Rover – but in the rush
for BREXIT expansion also seemingly gloss-over the potential for down
the road problems when invested in the region].
Mariella
Luz -
“In
our sector we do have plans, such as that managed by UNOCA (the UN
Organisation for Civil Aviation) which illustrates that
infrastructure will be the base for any future innovation or
technologies in the sector. So UNOCA has been promoting the need for
PPPs (Public-Private Partnerships).
“And
looking at Brazil, we (Embraer) are as producers of regional aircraft
looking to expand regional airports and overall (national and
international traffic) integration. Given the size of the countries
population, its demographics, the potential economic expansion rates
etc, we need more airports. The reality compared to the LatAm region
is that Brazil is under par [ie under even reletive capacity regards
necessary passenger air travel and air-freight. There's enormous
potential and great need, and the stakeholders are in discussions; so
the plan is there.
The
Chair mentions the importance of Sustainability, and then opens the
debate to the audience.
One
member :
“We
read a lot about Chinese investments in Brazil, which I believe is
mostly the electrical sector, so what do the Chinese know that you
don't or vice versa? And previously the Chinese bought things, but
are now major players. Help us understand what the Chinese are doing?
Georgina
Baker -
“Its
about 'risk-appetite'...they come from EM and understand EM and have
a different [ie higher and more long term] risk appetite to other
investors. Able to put a lot of money to work and understand the
risk-reward function because [having been through similar themselves]
they understand the risk.
“The
previous example I mentioned was begun by PBOC (People's Bank of
China) with a $3bn initial stake via IFC, and they did the same with
the Inter-American Development Bank and DBRD and others. That money
enabled IFC to build its [project portfolio] platform so they have an
enormous amount of money, they can work and have a commensurate
risk-appetite. That's my opinion.
Joe
Kaeser -
“I
understand markets better, but (the Chinese stakes) could also be a
strategic interest. And I would say this is so for Brazil and Africa
– their global view of things. China views developed economies like
Australia but sees greater potential in still developing regions of
LatAm and Africa. They can bring a lot of money and get strategic
interest in return
“The
Chinese are very smart, long-term orientated and don't talk
much...and if they do they think first, and then act. They have a
plan but its not by the quarter, year or decade, their plan is about
the long-view. If you talk to Chinese companies and leaders they
posit that the last 200 years was a minor aberration of their
long-term global development. Think about this and you understand why
they've been so interested in agriculture and natural resources,
especially so given their G2G remit.
“Financial
investors obviously need a far shorter term view, whilst Strategics
like us are in the middle. So the Chinese position requires much
consideration by our sector so as not to be left with a single
option.
[This
simple, recognised but vitally under-appreciated aspect of the global
economic dynamic over the last 2 decades; at least as covered by the
media. Africa's initial welcoming of the Chinese to generate trade
and build infrastructure (rail, road, telecoms, schools) has latterly
seen greater disquiet amongst African locals as the once small-time
newcomer local Chinese trader has started to monopolise local and
regional small and medium size agricultural production, such as
higher value poultry farming and trading. Able to access greater
finance possibilities from home, the Chinese sought to achieve scale
production and sales to dislodge what were generations-old and very
separate African chicken farmers and traders.
This
increasing disquiet has latterly led to some African governments
actively encouraging the return of the old European 'colonists' to
both partially protect domestic SME activities and to obtain higher
competitive bid prices for land or goods between the Chinese and
other foreign interests].
Rodolfo
Speilmann -
“There
are different types of Chinese investors of course, Strategic vs
Institutional, and the latter think like us given their own business
remits. What we need to understand are the Chinese SOEs, since we
need to team-up with them. And that will only grow and is a
new-reality and a learning process.
“And
I would concur...they are very studious, laborious in understanding
an industry, and not quick in arriving at conclusions. So the picture
presented is that of long-term interest, not just financial results.
Mariella
Luz -
“The
Chinese have a huge interest in Aerospace, with long business cycles
of 15-20 years and major potential on both sides of the Pacific and
Atlantic, with whole sector interests from manufacturing
industrialisation to aircraft production to airport infrastructure.
Another
audience from S&P Global member asks :
“Much
said about the Regulatory framework, but what about Governance and
how to improve that Governance?”
Georgina
Baker -
“From
the IFC perspective the issues of Environment, Social and Governance
must meet standards. But its a journey with all clients and so seek
to reach the best standards in corporate governance. As an economic
development body it's integral. We recognise they may not be there
when we invest but ensure that they are created within a short time.
Rodolfo
Speilmann -
“For
us Compliance is almost a 'gateway' item that is non-negotiable.
Governance is negotiable but Compliance is not. Controls do evolve,
but they are key to any long-term investment, Governance and
Transparency are related to the business culture, Compliance in
Brazil today given ever greater importance on company boards, with
many external advisors able to assist. So a big push to to increase
that. But the core values have to be in place initially, then you can
formulise it. As per Governance, the independence of boards, the
qualification of boards, there's a whole set of items being applied.
“And
that's part of our value-addition, to bring institutional standards
to our invested companies.
The
Chair asks “how do you convince FDI investors about Brazil, after
'Lavo Jato' and the construction sector debacle?”
Rodolfo
Speilmann -
“We
are working constantly to explain the context of Brazil and the
medium and long-term. Brazil has improved...5 to 10 years ago it was
looking good at the surface, but was rotten inside. Maybe I
exaggerate to make the point, but now we see just how rotten it was
and is being addressed. Now we are taking out the 'cancer' and its
taking time for the patient to cure.
“What
is vital is that the cure must come through institutions, not some
central Polit Bureau, but from the multitude of individual but
aligned investment influences. There would have been good investments
10 years ago, but without the clarity [and so higher risk]. Today
there is more transparency, but it is an onward journey for Brazil.
The
Chair then asks about the compliance paradox of the great problems
for infrastructure companies in obtaining Environment Compliance
Licences, yet the build process still creating environmental damage.
“What can be done?”
Mariella
Luz -
“Compliance
is here to stay and that's a good thing for every company and
government. As an industry (Aerospace) we are focused on the
environment worldwide, so not a Brazil basis or Embraer basis. It's
about complete systems not individuality, with global processes and
solutions.
“The
sector states that by 2050 it will reduce its CO2 emissions by fifty
percent from the base-line of 2005. This done through a 4 pillar
strategy: Technology, Logistics, Infrastructure, Marketplace.
[This
did not directly answer the question about Brazil's compliance
paradox in infrastructure building. If known, some site specific
examples would have been very useful, or indeed a glimpse into
Embraer's future technology strategy that better integrates airplane
and airport through energy and digital.
Instead,
given the different development paths each EM country is on and the
different airport and airplane infrastructures needed (eg primative
'bussing' STOL locations in mountainous or forested areas vs a
regional airport vs greenfield major international sites per the A380
vs high-volume passenger transfer locations for mid-size jets) the
'global systemic' answer whilst partly true is also too simplistic.
Each
airport and helipad development is essentially categorised and so
must both share certain characteristics whilst also very different;
so making each effectively a template of a model type.
This
needs to be better explained to the investment community so ensure
specific enviromental regulatory compliances are created as fair per
type, and are eventually met by the infrastructure builder-operator
at completion and in use].
The
Chair asks the audience for a question:
Member
from American Tower Corp..
“Could
the panel comment on the Telecom-Information-Communications
infrastructure...the state of things and bridging the gaps there?”
[None
seem too keen to answer, possibly illustrating their unfamiliarity
with the subject}.
Mariella
Luz -
“We
have a project with the Brazilian government, Embraer and Intelbras
as partner, to build a satellite, with first launch in French-Guiana
last year, and has both civilian and defence purposes.
The
gentleman from American Tower Corp states:
“Theres
significant under-investment at present, if you look at all these
infrastructures much will depend upon communications connectivity to
bring efficiencies and productivities etc...I think there's a gap,
the discussion rarely had en mass, instead led by certain companies.
This needs to come under any long-term vision plan.
Joe
Kaeser -
“I
agree...infrastructure is about connectivity, the 4th
Industrial Revolution, the Internet of Things...none will work
without it. 4G looks great (at the symposium site) but what about the
suburbs? And so questions about autonomous driving without
connectivity. Without it theres no progress on exchanging data to
optimise things.
The
Chair prompts about the 'Digital Alliance':
Joe
Kaeser -
“Of
course...its central...we don't talk about how great software and
cyberspace is, but to merge the physical world with the virtual
world. And that's what many people forget when they talk about the
next generation of manufacturing, engineering, industrialisation.
“Some
people try to make us believe there's no physical world anymore,
there's no molecules and its all cyber-based, but there is wood and
plastic and chocolate and cars and carpets and what-have-you.
“Connecting
the physical world with the capabilities of simulation and analytics
and bring that knowledge generated in the virtual world back into the
physical processes...that's the recipe – whether flying aircraft or
connecting people etc etc.
“And
similarly, teaching the young that the physical world is not out of
fashion, infact the physical becomes a better world because its
enabled by the virtual world, not the other way around. So train them
about man-machine interfaces and its not the old oily-greasy stuff
anymore. You work with your brain and your hands together.
“Because
if we don't get the next generation to believe about the 4th
Industrial Revolution, there will be a different alternative
revolution with burning cars, not self driving cars. IT
industrialisation has split society and we don't want to split it
further apart.
“We
need to re-integrate society via infrastructure before the rhetoric
of a complete IT society. If people don't understand they are scared,
and they prefer their [very necessary] safe [ie personally
controlled] circumstances. Technology is not the hold-up...its
society's perspective. Hence the importance of society's leaders.
The
Chair sums-up with:
1.
The desire of intermediate bridge companies to bring institutional
investors in EM regions
2.
The need for an Economic Development Plan (meaningful and far
reaching)
3.
Such Plans must endure across political and business cycles.
4.
The possible lead of the airline industry in Sustainable Development
and Use.
To
End -
A
general interpretation of 'Building Brazil' by investment-auto-motives...
Brazil's
own osmosis of its innate value systems has through its history been 'bi-polar'. The very different influences of the
obviously Latin and erratic Portuguese in the early years of 17th/18th
century trading, then partially countered by the far more puritanical
German and Japanese immigrants in the 19th century; whilst
the British trading influence was fluctuational in the period, with
both long-termist projects and 'get-rich quick' efforts. By the early
20th century the Americans were the driving force with a
similar 'Anglo-American' mindset. The post-WW2 era saw the massive
influence of Volkswagen and the Germans, then the Italians with FNM
and FIAT in the 1970s.
Each
development era then set a mark upon the psyche of all social
classes, whether that be selfishness and exploitation of the moment,
or building toward a better unified future. It has been the tension
between the more evident Latin and the less obvious but powerful
Tuetonic, that rules the mindset of Brazil.
The
very closely-knit German immigrants (of simple, Lutherian background)
soon realised that to avoid innate problems and so prosper in their
own way they had to quite literally separate themselves from the
worst elements of Latin culture, and so quintessentially German towns
like Blumenau and Pomerode were built as enclaves.
Obviously,
the Latin influence over Brazil has been far greater given the mostly
Portuguese roots of the establishment, but herein again in a schism
between the archetypes of the old trans-Atlantic 'trader' (dealing to
be 'in for the kill') and colonialist (setting out plans for the
long-term). And one influence undermines the other.
To
see Brazil prosper over the long-term and fulfil its potential, the
Teutonic influence must return.
It
was seen in the socio-economic and cultural transformation of the Sao
Bernardo de Campo area when VW Fusca production imported German
values, with logical rationality balancing Latin intuition and
emotion.
With
that marriage of mind and spirit physically manifested in the 2D
'co-axial' building-plan of Brasilia.
The
future of Brazil with the digital dimension reaching up to 'the
cloud'...is now 'tri-axial' and a fully 3D future maximising mind and
spirit – echoed as industry and the arts with e-enablement - offers much 21st century potential.
