Before his departure from Singapore, outgoing Ambassador of Brazil to Singapore, HE Flávio Damico spoke to Editor-in-Chief Ms Nomita Dhar about the lessons he is taking away and how they can benefit his home country
YOUR Excellency, you have seen and experienced many things ever since you arrived here in Singapore, three and a half years ago; it has been quite a roller-coaster ride and somehow you’ve managed to steer the ship of Brazil-Singapore ties in a positive direction. What’s happening in Brazil now on the economic front?
In 2016, Brazil was in a very complicated economic and political situation: a deteriorating debt-to-GDP ratio compromising government accounts with serious consequences. Beyond the short-term deleterious macroeconomic situation of fiscal deficits, Brazil was in no position to fund necessary investments in infrastructure to boost the competitiveness of its exports of agricultural and mineral commodities. Since our main markets are in Asia, we are disadvantaged in relation to our competitors. Simultaneously, the domestic political situation was also very serious with enormous revulsion against corruption, which led to important changes. Of course, we could not have addressed this problem unless there was some political change for a country that is one of the largest producers of commodities, both in agriculture and oil and gas.
Being here in Singapore enabled me to consider ways on how a country on the Atlantic could be relevant in a world where the Indo-Pacific is more and more important. My good friend Professor Danny Quah, Dean of the Lee Kuan Yew School of Public Policy, has argued convincingly that the centre of economic gravity has slowly moved away from the West to the East. This is a reality we have to be aware of. Much of my job in Singapore entails drawing the attention of the Brazilian government to developments here.
Since 2015, the Brazilian economy has improved a great deal. The risk perception has declined dramatically. In 2015, the annual inflation rate was 10.7%, the interest rate 14.25%, the stock exchange index (IBOVESPA) 38,000 and Brazil’s country risk was at 533 points. In 2019, the stock exchange index is 108,000 and Brazil’s country risk 117 points – the lowest level in 6 years, Our inflation too is at the lowest: it’s about 3% and the interest rates are now likely to drop to 4.5%, historically, its lowest rate. Thus a marked improvement in all indicators!
Prospects for the resumption of a faster pace of growth by 2020 are quite good. There has been one point about which we are disappointed: the recovery has not been, so far, accompanied by commensurate job creation. The economy is not yet strong enough to support consumer confidence. Besides that, many of the companies were hit hard by the weak performance of the economy in previous years.
This brings us to the problems facing our manufacturing sector, which has a lot of hard work to do to become fully competitive globally. To redress that, we are moving very fast towards concluding trade deals. Mercosur has closed one with the European Union and also with the European Free Trade Association. We will have the second round of our trade negotiations with Singapore shortly. So now in economic terms we have a lot of clarity on where we are going and the speed at which we can do this. Slowly, the pieces are falling into place and I’m very happy to report the economy has been at its healthiest stage after quite a while.
Has the US-China trade war, from which we are all suffering, had an impact on the Brazilian economy?
Not directly as yet. Of course, we are worse off every time multilateral rules are brushed aside and countries initiate unilateral action. It does not mean that Brazil will win in every scenario once a truce is reached between the US and China. We are in a very awkward position, since Brazil’s productive structure is very dissimilar to the one prevailing in the ‘red states’ in the US that elected President Trump. Like Brazil, those states are powerhouses in the production of minerals, oil and gas and agricultural commodities. So we are in a situation where we tend to suffer as much as others when the ’elephants‘ are fighting, but we might also suffer if some level of accommodations is reached between the US and China.
So far, the worst has not happened. Of course, a number of other things might prove to be good for my country, such as the rise in meat exports. Brazil is in a condition to cover the reduction in supply of pork following the outbreak of the African swine fever in some countries. We are also in a good position to export substitute products like chicken and beef.
What have been the lessons you are taking away from Singapore from your time here as Ambassador?
Singapore is a fascinating place and its unique trajectory — economic, social, etc. — is quite amazing. In 30 years it has moved from Third World to First. The rise in income levels is almost unparalleled anywhere else. Of course, some factors inherent to Singapore have helped with its success and it also has to do with the international scenario, which bore opportunities for a country seeking to find a niche for itself. But a favourable scenario is not enough. You have to have people here who are able to identify opportunities and make the necessary adjustments and reforms that would put the country in a position to take advantage of these circumstances. This is perhaps the historical legacy of Singapore’s pioneers, who were able to actually anticipate the future and prepare the country to reap its benefits.
Nowadays, things have become a little more complicated. The international scenario has been eroded by the growing mutual suspicions between the United States and China, and like all other countries Singapore is caught in the middle. Singapore is at the fulcrum of this due to its historical linkages both to the East and to the West and is very much exposed to these circumstances. I sense, however, that the spirit of Singapore’s pioneers is still here, as the current administration is trying to find a way for it to be more competitive and more innovative and is also trying to attract the most modern industries and sectors into the city-state. There is no let-down in seeking to keep up with the times.
So, if I were to bring something of Singapore to Brazil, it would be this restlessness, this notion that we cannot be complacent and that a country should always strive to find a better position in the international system. I believe that Brazil can draw inspiration from this attitude. We are such a large country and we should not fall into complacency. It would not be a bad idea
to spread those ‘genes’ of restlessness in my country.
On the bilateral front, what have been the highlights this year?
I’m very happy that in my three and a half year tenure I have managed to accomplish what I set out to do: acting based on what economic actors on both sides wanted and creating a favorable environment for these actors to interact. We were starting from a high baseline as Singapore was already the 11th largest destination for our exports. My challenge was to generate the necessary confidence for us to go to the next level. To accomplish this, we identified two main areas: (a) investment facilitation, which we have done with the signing of the Agreement on the Avoidance of Double Taxation that hopefully will be ratified by the Brazilian Congress by the end of this year, and (b) the negotiation of the Free Trade Agreement (FTA) with Singapore, which we hope will be accomplished in the second round of negotiations to be held shortly. Once these have been established, things should get smoothened out.
We didn’t receive many visitors of note from Brazil here in Singapore from 2016 to 2018 because of the Brazilian domestic political cycle. In 2016, we went through a Presidential impeachment. In 2017, there were municipal elections and, in 2018, we held a general election. So, politicians and decision makers were reluctant to travel abroad. More recently, once the cycle of elections was concluded, we started to see a fairly large number of visitors, missions and politicians from different states. We noticed that they displayed more openness to what was happening here in Singapore. This year, we had five governors and two vice-governors visiting Singapore.
The level of confidence is quite good, particularly when you look around and see that the world is becoming more complex and things are getting messier by the day. There’s an inflation of expectations… but what’s also happening is the disconnect between the possibilities of the economy and the expectations of the people who want things moving very fast, but don’t have the capacity to withstand the setbacks… So there’s a lot of impatience due to the fact that the world is in our palms thanks to mobile phones and there’s greater awareness of how things are taking shape in other parts of the world. Discontent can spread easily via the information technology revolution. The news cycle has shortened considerably. We need to be prepared for that.
What is the technological scenario like in Brazil? We have also learnt that there is an increasing interest from Brazil in the Singaporean innovation ecosystem.
It’s like everywhere else when it comes to information and communication technology in the international scene: discussions about what changes the 5G network will bring and what’s going to happen between Huawei and the United States, regarding the deployment of the 5G. We, of course, will not be an active part of these debates. But, just like Singapore, we can prepare for the new hi-tech scenario. And we found out that we can do it much better when we join our talents. We had a number of missions this year who came to study the Singaporean innovation ecosystem and to explore possible partnerships in research and development. I am pleased that Brazil’s Industrial Property Institute signed a memorandum of understanding with its counterpart, the Intellectual Property Office of Singapore, to collaborate in a number of areas, for the benefit of entrepreneurs and innovators in both countries. Brazilian science, as measured by the number of scientific publications, has achieved a very high level of international recognition. I firmly believe that both Brazil and Singapore can benefit if we join forces to leverage this scientific knowledge into marketable innovations. There are already a number of Brazilian entrepreneurs active here, in areas such as fintech, and also in research of such groundbreaking materials as graphene. In addition, Singapore can be a source of venture capital for Brazilian startups. In fact, I’m very optimistic as I envisage more and more companies showing interest in these areas.
You have also been a very important member of the diplomatic corps here. What was that experience like?
The diplomatic and consular corps here is of very high level, and one important role it has is providing support to a newly arrived diplomat, in terms of advice on what to expect from the new country. That’s why I decided to join the Foreign Service: because I embrace change and coming to a new country means understanding its people, economic circumstances, new societal scenarios; it’s all very fascinating and enriching. So, by the time I leave Singapore, I will certainly look back and see how much I learned from and enjoyed this amazing experience in one of the most dynamic cities on the planet, the “unofficial capital of Asia”, as Parag Khanna put it in his recent book, ‘The Future is Asian’. I feel privileged that I was a part of it and I hope to have made a certain contribution back home in terms of drawing attention to the importance of things taking place here.
Would you recommend Brazil as a hub among Latin American countries for businessmen?
The fact that the Singapore government set up in Brazil its only embassy in Latin America has been the biggest endorsement for my country. I see the potential for all manner of investments coming in. On our side, we have no hesitation in using Singapore as a hub for entry into Southeast Asia and beyond. In terms of politics, we left behind a rough period in Brazil. Politics is becoming more contentious in every country. We
are reassured by the fact that the economy points to a much better future than ever before.
What is your favourite place in Singapore, which you know you will miss?
I will miss my home here. It is so peaceful and is such a refuge for me, given my hectic pace life. And then there is the beautiful Marina Bay Sands area, the city skyline which takes your breath away…. Likewise, my wife and my stepson carried out a very fruitful and happy life here as well.
Please share with our readers about your next posting.
My next posting is as Ambassador to Paraguay, a neighbouring and really important countary for Brazil. Brazil is the second largest investor in Paraguay. Among the many important joint projects, Brazil and Paraguay co-own the world largest hydro-electrical power plant, Itaipu (it generates more electricity than the Three Gorges dam in China). We also share a long border area of around 1500 km. Cooperation between the two countries is essential to control it. Moreover, we have a very large Brazilian community living in Paraguay. It is going to be a very different assignment from the one here in Singapore. I will have a big challenge ahead that I am looking forward to confronting. I am sure that, in spite of all the differences between the two places, the experience I gained in Singapore, and the many things I learned here, will help me carry out my new responsibilities successfully.
The above first appeared in IT’S TIME FOR BRAZIL IN SINGAPORE published by Sun Media Pte Ltd for the Embassy of Brazil in Singapore 2019.
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