Chapter 6. SME export policies in Brazil

This chapter describes and assesses Brazil’s federal policies in support of small- and medium-sized enterprise (SME) export, which include, among others, export training, trade facilitation, export financing, and e-commerce promotion. Export training is widely available through the National Plan of Exporting Culture (PNCE), operated by the Ministry of Economy, and the Export Qualification Programme of the National Export and Investment Agency (Apex-Brasil). Both programmes are well-designed, although it is not clear the extent to which they have resulted in an increase in the number of exporting SMEs and/or SME export volumes. Trade facilitation for SMEs has mostly occurred through the Simples Exportação regime, while there is scope for increasing the availability of export finance and for launching new programmes forging closer ties between multinational enterprises and local SMEs.

    

Introduction

Micro and small enterprises, as defined by Lei Complementar 123/2006 (Micro e Pequenas Empresas, MPEs),1 accounted for 40.8% of the total number of Brazilian exporting companies in 2017. When medium enterprises are included, the proportion surges to 71%. However, the MPE share in national export volumes is trivial, amounting to only about 0.5% of the total in 2017 and rising to 3.3% when mid-sized enterprises are included.2 There is also a high level of concentration of exporting MPEs in five south and south-eastern states in the industrial heartland of Brazil, with about 70% of them located in São Paulo, Rio Grande do Sul, Minas Gerais, Paraná, and Santa Catarina. This may pose problems to the extent that states with few exporting MPEs may not see the importance of engaging in export support policies.3

There are many reasons why SMEs are less likely to be involved in exporting. First, the large size of the Brazilian domestic market may act as a disincentive. Second, many MPEs are in non-tradable sectors and, thus, they are not the target of export promotion policies.4 Third, many of them lack awareness of export opportunities, exporting know-how, and the capacity to meet the demand and requirements of international markets. Fourth, many small business owners may not be able to function in English and other languages spoken in global markets. Finally, there may also be disincentives to exporting inadvertently caused by trade requirements, including logistics challenges and customs requirements. All of these challenges are relevant and should be addressed in any domestic SME export strategy.

Key players in the SME export ecosystem

Several federal institutions are involved in export and foreign trade policy in Brazil. At the beginning of 2019, the main institutions were the Ministry of Economy, the Ministry of Foreign Affairs (Ministério das Relações Exteriores, MRE), the Brazilian Agency for Export and Investment Promotion (Agência Brasileira de Promoção de Exportações e Investimentos, Apex-Brasil); and the Brazilian Micro and Small Business Agency (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas, SEBRAE). In addition, there are also other federal entities charged with providing export credit to SMEs.

The Ministry of Economy and the Ministry of Foreign Affairs are the two main ministries supporting SME export   

        

The Ministry of Economy is the main Ministry responsible for SME export promotion. At the Ministry of Economy, the Special Secretariat for Foreign Trade and International Affairs (Secretaria Especial de Comércio Exterior e Assuntos Internacionais) is the main body responsible for all policies related to business internationalisation. In particular, SECEX (Secretaria de Comércio Exterior) is responsible for implementing the National Plan of Exporting Culture (Plano Nacional da Cultura Exportadora, PNCE) and collects a broad range of export and foreign trade information on the Single Foreign Trade portal as part of the Integrated Foreign Trade System (Sistema Integrado de Comércio Exterior, SISCOMEX). This includes “The Guide to Foreign Trade and Investments” (“Invest & Export Brasil”); the “Showcase of Exporters” (Vitrine do exportador), an online and searchable directory of Brazilian companies; and the “Learning how to Export” (Aprendendo a Exportar), a website focused on providing guidance and knowledge about the entire export process. SECEX is also responsible for all activities related to trade in services.

Still at the Ministry of Economy, under the Special Secretariat for Productivity, Employment and Competitiveness (Secretaria Especial de Produtividade, Emprego e Produtividade), there are also some activities aimed at business internationalisation, especially for micro and small companies as defined by Lei Complementar 123/2006 (MPEs). In particular, the Sub-secretariat for Micro and Small Businesses (Subsecretaria de Desenvolvimento das Micro e Pequenas Empresas, SEMPE) follows the implementation of the PNCE and SEBRAE’s MPE export programmes, while the Sub-Secretariat for Innovation and Start-ups (Subsecretaria de Inovação e Novos Negócios, SIN) operates StartOut Brasil, a programme which aims to internationalise start-ups through capacity-building and business missions to foreign markets.  

The Ministry of Foreign Affairs (MRE) is also a relevant player in the support of business internationalisation. In addition to helping SMEs with participation in trade missions and trade fairs, the MRE manages the Invest & Export Website. This web platform spreads information to all entrepreneurs, but it is especially relevant for SMEs, which are generally less experienced on foreign trade issues. The website hosts six sections, three of which are dedicated to domestic companies (Export, Import and Invest) and three of which are meant for foreign companies (Buy from Brazil, Invest in Brazil, Discover Brazil).

Apex-Brasil plays an important role in policy implementation   

        

Apex-Brasil works under the responsibility of the MRE and is the key federal agency facilitating the access of Brazilian companies to international markets. It is a well-functioning agency that operates a number of programmes both for large companies and SMEs. It is present in 16 states and has 8 offices abroad that work closely with the Trade Promotion and Investment Departments (Sector de Promoção Comercial e Investimentos, SECOMs) at Brazilian embassies and consulates.

In 2018, Apex-Brasil worked with 15 737 Brazilian companies, of which 4 527 (29%) were already exporters, contributing to 21.5% of total national exports. The Export Qualification Programme (PEIEX), which targets non-exporters or export beginners, supported 7 258 companies, while 7 957 companies were backed through trade promotion activities (participation in missions and trade fairs) around the world. Apex-Brasil also offers the e-Xport Brazil programme focusing on internationalisation opportunities through e-commerce. The agency estimates that 55-60% of its clients are SMEs.

SEBRAE also supports the export of micro and small businesses   

        

Through its network of 700 service centres throughout Brazil, SEBRAE also fosters exporting by micro and small companies (MPEs) through the organisation of online and classroom-based training courses, seminars and workshops. SEBRAE and Apex-Brasil work collaboratively, with SEBRAE referring MPE clients to Apex-Brasil and vice-versa. SEBRAE also offers a Business Linkages Programme that seeks to integrate MPEs into the supply chains of large domestic producers in selected sectors and has recently developed online e-commerce training modules for MPEs.

BNDES and Banco do Brasil offer export financing solutions   

        

Two federal institutions are mostly involved in the offer of export financing:

• Banco do Brasil provides both short- and long-term export finance to Brazilian exporters. Specific to SMEs (enterprises with no more than BRL 10 million in annual revenues) is the PROGER Export programme, which provides credit to finance the pre-shipment production of goods bound to foreign markets and the post-shipment financing of sales transactions.

• BNDES (Banco Nacional de Desenvolvimento Econômico e Social), Brazil’s main public development bank, offers pre- and post-shipment export financing solutions for which SMEs can also apply.

CAMEX co-ordinates foreign trade policy at the national level   

        

At the federal level, the Chamber of Foreign Trade (Câmara de Comércio Exterior, CAMEX), a high-level interagency body, is responsible for co-ordinating Brazilian foreign trade policy. Since the creation of a super Ministry of Economy in January 2019, CAMEX falls under the responsibility of this Ministry and its members include, besides the Minister of Economy, the Ministers of Agriculture, Defence and the Executive Office of the President (Casa Civil). CAMEX has a broad range of responsibilities, including setting the terms and conditions of export financing programmes and supervising the work of the National Trade Facilitation Committee (Comitê Nacional de Facilitação de Comércio, CONFAC).

CONFAC, established in mid-2016, brings together representatives from the government and the private sector to identify measures that can reduce trade-related compliance costs and, thereby, increase the competitiveness of Brazilian companies. To co-ordinate with the private sector, CONFAC has established a Subcommittee on Cooperation which is composed of representatives of the National Industry Confederation (CNI), the National Trade Confederation (CNC), the National Transport Confederation (CNT), the National Agriculture and Livestock Confederation (CNA), and SEBRAE.

While CAMEX and CONFAC play an important co-ordination role, there is no co-ordinated approach at the federal level for the development of SME exporters. It would, therefore, be important to mainstream SMEs in trade policy discussions held within CAMEX to ensure that their needs are taken into consideration, especially in the context of export promotion policies. The involvement of agencies and financial institutions such as Apex-Brasil, SEBRAE and BNDES in this policy dialogue would be useful, even without a voting right.

Co-ordination of export support at the state level, on the other hand, is the main role of the National Plan of Exporting Culture (Plano Nacional da Cultura Exportadora, PNCE). As explained in the next section, the main objective of this plan is to ensure that export promotion of state-level public and private institutions is executed in a co-ordinated and coherent way.

Main federal SME export programmes

This section presents information on the main federal programmes supporting SME exports, starting with the National Plan of Exporting Culture. The rest of the section looks at programmes by the following categories: access to information; export training; women in trade; trade facilitation; export finance; tax-based export incentives; e-commerce initiatives; and supplier development programmes.

The National Plan of Exporting Culture

The National Plan of Exporting Culture (PNCE) aims to increase the number of SME exporters   

        

The PNCE was originally launched in 2012 and is currently managed by the Ministry of Economy. The aim of this programme is to enliven the export culture by developing and organising a network of state-level public and private institutions involved in export promotion. This is done through the creation of PNCE State Committees that include the main regional organisations involved in trade promotion.

The PNCE pursues three objectives:

• Identify companies with export potential and expose them to exporting activity for the first time.

• Enable one-time or casual exporters to become regular exporters.

• Diversify the exports of those companies that already export regularly.

The PNCE has designed a logical framework based on the sequential steps of the export path, with support activities organised along this path (Table 6.1). 

Table 6.1. The PNCE’s logical framework for export support
Stage	Target group	Type of support
Awareness	Groups of enterprises that have never exported and have export potential but do not know the benefits of export or the basic steps of the export process.	Export seminars and basic (online) training modules on how to export.
Commercial intelligence	Companies deciding to start the export process and needing information on the potential market(s) for their product(s).	Support to develop market studies and identify potential markets. These actions can be delivered to groups of SMEs or to individual enterprises.
Product and process suitability/adequacy	Companies that have identified a target market for their products and have detailed information about this market.	Support to help the enterprise adapt the products to the standards and requirements of the target foreign market.
Trade promotion	Companies that already have products that meet the requirements of the market(s) in which they intend to act, or that seek to know more about the requirements of their potential buyers or need more information on competitors and consumers.	Invitations to participate in trade shows and business roundtables.
Marketing	Companies ready to market abroad, but who need support in identifying buyers, forms of distribution, customs procedures, and so on.	Support for negotiation, logistics, distribution, etc.

Due to some bottlenecks experienced in the first phase of the programme implementation, such as duplications in existing export support services and information gaps making it difficult for enterprises to identify where to receive support, the PNCE adopted a new service model in 2018. This model, launched as a pilot in the two states of Minas Gerais and Roraima, includes a diagnostic of the internationalisation competencies and requirements of each company, delivery of an international maturity evaluation assessment, and a personalised export development action plan inclusive of targets. Following the success of the pilot phase, this new methodology is expected to be rolled out nationwide.5

The full implementation of the PNCE’s new methodology in the 26 States (plus the Federal District) will require considerable time, effort and resources, but it is important and should be resourced adequately. Among other things, it will require training staff on the new export-readiness methodology. However, it would also important that the PNCE include outcome-oriented targets among its objectives, such as an increase in the number of new SME exporters. At present, the PNCE does use an online management information system to monitor and evaluate the actions of all state-level partnering institutions, but this only covers the number of actions implemented and the number of SMEs served.

Export information

There are a number of mechanisms to inform businesses about exporting opportunities, but no dedicated guide targeted to MPEs  

        

A number of mechanisms are used by the government to disseminate information on exporting. The Foreign Trade and Investments Guide (“Invest & Export Brazil”) brings together the information of more than ten portals dedicated to the topic of foreign trade, covering many thematic issues in Portuguese, English and Spanish. This product is the result of a partnership between the Ministry of Economy, the MRE, the Ministry of Agriculture and Apex-Brasil, and is linked to the SISCOMEX portal. The Ministry of Economy also publishes the Basic Guide to Exporting Services, while the MRE makes the Complete Guide on the Brazilian Export Process (Guia completa sobre o processo exportador brasileiro) available to Brazilian companies, especially SMEs, that addresses questions such as “why export”, “what to export”, “where to export” and “how to export”. COMEX-STAT, an online database on Brazil’s foreign trade statistics developed and maintained by the Ministry of Economy, allows free access to users to make detailed data queries on Brazilian exports and imports. Finally, Apex-Brasil also develops content for Brazilian exporters, preparing market studies to support export promotion and presenting business opportunities in strategic countries and sectors. Apex-Brasil also organises a wide range of webinars to update companies about market access opportunities as well as facts and issues affecting Brazilian trade and investment.

However, there is no dedicated guide on exporting and importing for MPEs, in particular. The Invest & Export website includes information mostly relevant to foreign companies wanting to do business with Brazilian companies, while the Basic Guide to Exporting Services makes only one reference to MPEs in relation to a programme offered by SEBRAE. As MPEs face many challenges in entering foreign markets, it would be useful to disseminate to this business segment the whole range of information on MPE-specific training and capacity-building programmes, simplified export and import facilitation regimes, export financing instruments, and tax incentives for exporters. The document should be organised to provide a clear journey able to navigate users through the different stages of the export process.

Another initiative of the federal government to profile Brazilian companies in international markets is the online and searchable directory called “Showcase of Exporters” (Vitrina do exportador). This is offered for free to Brazilian companies, which can customise their information in the directory (in Portuguese, English and Spanish), including product photos and specifications and contact information for foreign buyers. In 2018, there were 3 600 companies in Vitrina do exportador, only 10% of which were active exporters. This suggests underuse of the service, the reason for which should be explored to strengthen take-up.

Export training programmes

There is an adequate supply of export training   

        

There is an adequate supply of opportunities for entrepreneurs to learn about exporting. A number of these opportunities are accessible through online portals, while others are offered in face-to-face classrooms. Some of the export training programmes cover basic issues, while others are more intensive courses offering training in combination with coaching. The Ministry of Economy, SEBRAE and Apex-Brasil are the main institutions involved in export training.

The Ministry of Economy and SEBRAE both offer basic export training   

        

“Learning to export” (Aprendendo a exportar) is a website that explains the operational procedures of exporting.6 The website has been in place for many years and, more recently, has integrated the PNCE. Visits to the site average about 20 000 per month, which suggests a relatively high degree of interest. To further evaluate the effectiveness of the site, further analysis on the visitors would be useful, such as demographic characteristics, time spent on the site, number of reviewed components, etc.

SEBRAE offers the Internationalisation Programme for Micro and Small Enterprises, which is aimed at both exporting and non-exporting companies. The first step is to complete an online diagnostic tool on SEBRAE’s website that assesses the level of export-readiness of the company. In 2018, almost 400 MPEs filled out this form, most of whom received a very low score. Based on this assessment, MPEs are offered subsidised consultancy support (up to 70% of the cost), normally used to improve internal production processes and product labelling. Overall, this looks an interesting programme that should be aggressively promoted among MPEs, given their very low contribution to national exports.

SEBRAE also offers online courses ranging between 10 and 20 hours through which MPEs are introduced to export procedures. The major advantage of online courses is that the training is easily accessible across the entire country. However, online delivery does not compensate for the advantages of face-to-face workshops where entrepreneurs can question the instructor and benefit from the exchange with other participants. SEBRAE could consider adding a webinar component to the offer of online courses, which would enable participants to engage in dialogue with an instructor.

Apex-Brasil’s Export Qualification Programme aims at SMEs that have never exported  

        

One of the most comprehensive export training programmes in Brazil is Apex-Brasil’s Export Qualification Programme (Programa de Qualificação para Exportação, PEIEX). PEIEX targets all company sizes, but primarily SMEs that have never exported. It is implemented in regions where there is a density of companies with export potential. In these locations, Apex-Brasil partners with universities, technology parks and industry federations that bring together experts who are properly trained in the PEIEX methodology to help companies prepare to export. Each PEIEX-trained professor handles 12 companies per year.

Some of the training is delivered in group sessions, but most of the programme consists of PEIEX technical experts visiting each enterprise (Apex-Brasil, 2018). The expert first identifies the company’s exporting potential (first visit) and then evaluates the export-readiness of the business and designs a work plan to support the export activity (second visit). At the end of 6 months, SMEs with an exportable product are given the opportunity to participate in international trade missions and match-making opportunities organised by Apex-Brasil and its partners. Participation in PEIEX is free of cost to SMEs. In 2018, PEIEX served 7 258 SMEs, about 15% of which were already exporters, while the rest was not exporting at the time of the training (Apex-Brasil, 2018).

Several actions have been taken to improve the performance of PEIEX. The programme has expanded in more Brazilian states, using a methodology that has looked at industrial density, number of industrial establishments and productive vocations. The programme has also adopted a more rigorous definition of the profile of SMEs that can join the programme, improved the criteria to choose the PEIEX partners and redefined targets (e.g. the number of companies served and not the number of services) (Apex-Brasil, 2018). Finally, in 2018, Apex-Brasil introduced a new objective of tracking the conversion of participants from the Export Qualification Programme (training) to trade promotion activities (e.g. missions and trade fairs), to new exporters (i.e. success in exporting).

Since 2008, over 20 000 companies have completed the PEIEX Programme. However, there are few metrics on the export performance of these companies, such as the percentage that started exporting and the percentage that persisted with regular exporting activity. Attempts to monitor the conversion of participants from training through trade promotion to active exporting will provide valuable data for assessing the effectiveness and impact of the programme, although it might be difficult to catch the export evolution of those companies that export through commercial exporting companies (comerciais exportadoras).7

Apex-Brasil also offers online export training   

        

Apex-Brasil also manages a web platform offering online export training, i.e. “Passport to the World”. It provides access to up-to-date knowledge about export, business internationalisation, FDI attraction and strategic markets. Visitors can undertake training independently through webinars and online courses, which cover issues such as operational and strategic export processes, business opportunities abroad, and international expansion strategies.

Apex-Brasil could launch other programmes to encourage further SME exports  

        

One of the objectives of the PNCE is to enable one-time exporters to become regular exporters. Apex-Brasil should explore other possible programme options to achieve this goal. One, for example, could be to identify SMEs from the exporter database that have the potential to become regular exporters (sorting them by state and sector) and offer them further diagnostics and mentoring support. This activity could be executed in collaboration with SEBRAE, if the company is an MPE.

In addition to the group-based (and online) training approach to help SMEs move up the export path, many SMEs will likely need to upgrade their production capacity and improve their product quality. Thus, in addition to information, training and advice, SMEs will need access to financing to be able to undertake these improvements. Presently, such targeted financing programmes are not readily available (see section on export finance) and could be facilitated by BNDES with technical support from Apex-Brasil.

Apex-Brasil could also explore the option of encouraging the formation of SME export consortia that have been successful in other countries (e.g. Argentina, Italy, Mexico and Spain). In this approach, groups of SMEs with similar products and distribution channels are helped to form consortia to reach export markets that they would not be able to reach individually. Mexico provides an example of how SME export consortia can be supported (see Box 6.1).

Box 6.1. International learning model – Mexico’s Export Consortia Programme (RedExporta)

Description of the approach

ProMéxico is Mexico’s federal government agency responsible for promoting Mexican exports and attracting foreign direct investment. Its programme RedExporta encourages groups of SMEs to form an export consortium to create synergies in their exporting activity. The objectives are to increase the number of Mexican exporting companies, strengthen existing exporters, and diversify export markets through formal business partnerships. By partnering up and pooling their know-how and resources, SMEs can overcome many of the obstacles they face in exporting, such as inexperience in international markets and in identifying efficient distribution channels, limited access to information, inability to meet the requirements of international buyers, and financial and regulatory limitations.

RedExporta covers the costs of hiring consultancy services (up to MXN 250 000) to start, guide and organise a formal association of companies in the same sector or product line, preferably with the same distribution channel abroad. The support must be requested by a group representing at least five SMEs, to a maximum of 15 companies (with at least one of the SMEs being an experienced exporter). In 2016, there were 30 export consortia in RedExporta. In the 2016-18 period, 20 new export networks were expected to emerge as well as the consolidation of the existing 30.

RedExporta consortia may also obtain advice and funding support from ProMéxico for packaging, technical assistance in the production process, participation in trade fairs, consultancy for international trademark registration, legal advice on the preparation of international contracts, and consultancy for the development of an e-commerce and digital marketing strategy.

Network managers must file quarterly reports on promotional activities and biannual reports on export sales. Both ex ante and ex post data are collected on each participating company in the consortia, and the performance of RedExporta is measured against the number of promotional actions undertaken, the number of companies benefiting from such activities, the effectiveness of such activities in terms of increased export, and the level of satisfaction of companies with the support received.

Success factors

The success of an export network depends on a number of factors. SMEs in the network should be of similar size, have similar economic capacity, share quality control mechanisms, and have an export mentality, but their products and services should not compete directly against each other. Assessing the level of competitiveness of each SME’s products and services is a critical step in determining the training and technical assistance needs of the consortium. ProMéxico employs its export check-up for this purpose.

SMEs must know their partners reasonably well and be able to communicate their respective needs and what they hope to achieve by participating in the project. This involves group sessions in the initial phase of formation to provide opportunities for each SME to present its products and/or services, visit the plants of the other interested parties, take part in training courses and, where possible, participate in an international fair, either in Mexico or abroad, as a group. It is also important for SMEs to hold frequent meetings to collectively define the goals of the network, as well as to agree on member contributions, criteria and rules for the admission of new members, and dispute settlement mechanisms. The external consultant hired to guide the group in forming the consortium and making these decisions is a critical aspect. The continuity and success of the network hinge on the agreements reached at the beginning of the process.

Obstacles and responses

One of the main problems faced in earlier versions of this programme was the lack of resources to engage an external manager or consultant to mediate between the partners of the consortium and to develop a plan of action for the consortium as a whole. Appointment of one of the members of the consortium as the manager tended to create a lack of trust among the other SMEs and raise doubts as to the manager’s commitment to putting the group’s needs above those of his/her own company. This weakness has been overcome by making a grant available to each approved consortium for the hiring of an External Export Manager.

Relevance for Brazil

The specific aim of export consortia is to work with a cluster of SMEs to achieve efficiencies in bringing their products and services to foreign markets. The concept of working with clusters is not new to Brazil. Business clusters – Arranjos Produtivos Locais (APLs), as they are called in Brazil (see Chapter 8) – have long been supported by the federal and state governments with training and consulting focused on solving common business challenges. The export consortia approach could be integrated within the context of existing APLs to facilitate the export of APL-based companies.

For further information

ProMéxico (2016a), Creating Synergies to Compete – RedExporta: A Programme for Creating and Strengthening Export Networks in Mexico, Mexico City.

Finally, Apex-Brasil could develop an account management system for those SMEs which are regular exporters to help them export more and in more diversified markets. The role of an account manager would consist of following closely the activity of regular exporters and provide tailored advice and solutions from within the government or from the external community of business advisors. A similar programme, for example, has been developed in Scotland to support growth-oriented companies (see Box 6.2).

Box 6.2. Scottish Enterprise’s account management system

Scottish Enterprise is the Regional Development Agency of Scotland. Scottish Enterprise has developed an account management system to support more closely those local companies which have the potential to grow fast, create jobs locally and enter international markets. The account management process is facilitated by an account manager, who is a single point of contact who provides/co-ordinates one-to-one advice and guidance to a strategic contact(s) within the client company. The account manager has access to a team of experts within Scottish Enterprise or through external consultants who can offer advice across key areas for business growth, such as access to finance and investment, innovation, market development, and organisation and strategy development. Bespoke support is provided against agreed growth projects or against another clear rationale for Scottish Enterprise’s intervention (e.g. to retain employment in companies going through a phase of restructuring but considered strategic to the local economy).

Source: Upper-Quartile (2013), Evaluation of Scottish Enterprise Engagement with Account Managed Companies, http://www.evaluationsonline.org.uk/evaluations/Search.do?ui=basic&action=show&id=530.

Export development of women entrepreneurs

Apex-Brasil is actively promoting the presence of women entrepreneurs in international trade  

        

Apex-Brasil was the first to recognise in Brazil the opportunity for bringing more women-owned and women-led businesses into the exporting arena when it launched the “Women’s Leadership in Exports” category in the 2014 Apex-Brasil Award. It subsequently supported the 2015 Women Vendors Exhibition and Forum in São Paulo and participated in the programme of the VII Women Entrepreneurs Forum organised by Rede Mulher Empreendedora (see Chapter 5).

In 2016, Apex-Brasil launched its Women in Export Project with the goal of sensitising and empowering 2 000 female-led companies to export over two years. Through the programme, women producers are made aware of export opportunities, offered export qualification training, and invited to participate in international trade missions. In the first few months of the programme, and through co-operation with the RME, 1 360 companies were introduced to the export topic. An additional 401 women-led companies participated in Apex-Brasil’s export qualification actions, such as PEIEX and others. Of the companies supported by Apex-Brasil in 2015 and 2016, 3 500 were owned or led by women.

Apex-Brasil also makes special efforts to link Brazilian women-led companies to platforms that connect them with international buyers. Two examples are the She-Trades platform of the International Trade Centre (ITC), which connects international buyers to companies led by women, and WE-Connect International, an institution that certifies women-owned businesses as qualified suppliers to international buyers concerned about diversity in their supply chain.

Trade facilitation

Both large and small firms stand to benefit from trade facilitation, although empirical evidence shows that the impact is greater on smaller firms (OECD, 2017a). Thus, trade facilitation has the potential to help SMEs integrate into global markets through lower trade administrative costs, such as those related to compliance with customs procedures.

Since the establishment of the National Trade Facilitation Committee (CONFAC) in mid-2016, Brazil has made significant progress in implementing trade facilitation measures, leading among Latin American countries in most trade facilitation policy areas (OECD, 2017b). It has seen substantial reductions in international trade regulations, the number of licenses and procedures required for importing and exporting, and improved competitiveness in port logistics.

Under the World Trade Organization (WTO) Trade Facilitation Agreement, CONFAC is required to seek information from business associations on improvements to the trade system, specifically on import and export procedures, which it does through the Subcommittee on Cooperation (see previous section in this chapter). In this regard, CONFAC could try to include SME representative organisations in the consultative process on trade barriers.

The Single Foreign Trade Portal is Brazil’s main trade facilitation policy  

        

The Single Foreign Trade Portal pursues a broad reformulation of the import and export processes in Brazil. The portal was jointly initiated by the former Ministry of Industry, Foreign Trade and Services (MDIC) and the federal tax agency (Receita Federal) – both of which are part of a super Ministry of Economy since 2019 – in collaboration with 20 other entities. The goal is to reduce export and import requirements by around 40% and increase Brazil’s foreign trade flows by around 6% (CONFAC, 2018).

The Single Portal, developed within the framework of the Integrated Foreign Trade System (SISCOMEX), brings together information on export and import procedures and centralises the interactions between government and operators, using automation and information technology tools. The single interface with government and the provision of harmonised information reduces the operational costs related to import and export transactions, including the faster release of cargo and unified goods inspections.

New international co-operation agreements are supporting trade facilitation  

        

The Ministry of Economy and the UK Foreign and Commonwealth Office (FCO) signed, in August 2019, a Memorandum of Understanding on Prosperity Fund Cooperation on Trade Facilitation. This Memorandum covers different areas including intellectual property, trade regulations, ports and the accession of Brazil to the OECD. One component of the agreement also intends to “create a more inclusive foreign trade environment by supporting more SMEs to export, import and participate in global value chains”. This objective is pursued through the support of existing government programmes aimed at SME internationalisation.

A simplified export regime for MPEs, Simples Exportação, has had limited success and could be phased out  

        

As noted earlier, small companies stand to benefit even more than larger companies do from trade facilitation. With this in mind, and in compliance with the preferential treatment that the Brazilian Federal Constitution grants to micro and small companies with annual gross revenues below BRL 4.8 million (micro e pequenas empresas, MPEs), the federal tax agency (Receita Federal) issued in 2016 normative instructions for the introduction of a simplified export regime for MPEs.

This simplified export regime, which was called Simples Exportação, hinged on two main pillars:

• A Simplified Export Declaration (Declaração Simplificada de Exportação, DSE) applicable to MPEs opting for the Simples Nacional preferential tax and regulatory regime (see Chapter 3) and whose export shipment did not exceed USD 50 000 in each consecutive six-month period.

• Simplified operational procedures, to the extent that the latter could be carried out directly by the exporting MPE listed in the Export Register or by a qualified International Logistics Operator that would be authorised to perform all of the necessary export procedures on behalf of the MPE.

Receita Federal estimated that the use of certified logistics operators could increase the MPEs’ share in Brazilian exports from 0.8% to around 5% of the total; however, there are little signs that this has happened. In 2015, the MPE share of the export volume was 0.51% but in 2017, had only increased to 0.54% (see Chapter 2).

Given the small DSE shipment threshold of USD 50 000 (over a six-month period), it is not surprising that three-quarters of DSE users in 2017 were MPEs. However, this amounted to only 2 200 MPEs, i.e. one-quarter of the total 9 000 exporting MPEs. In terms of volumes, only USD 23.3 million of exports took place through the DSE in 2017 (SEBRAE, 2018a).

The policy to develop a door-to-door logistics system to facilitate the exports of micro and small companies had a reasonable intent, but it was not informed by a preliminary analysis to understand the specific problems that small companies might face in the use of this system and how these problems could best be addressed. In the end, it turned out to be difficult for the federal tax agency to administer the “authorised logistical operator” component of the programme. Part of the reason was the lack of adequate consultation with MPEs and logistics operators on the mechanics of the regime. Only a few logistics operators (large courier and express shipment companies) were authorised under the scheme by Receita Federal, mostly because registration rules were seen as too complex by smaller operators. In particular, this involved the limitation of providing the special logistics services only to MPEs in the Simples Nacional regime whose shipping requirements did not exceed USD 50 000 over a consecutive six-month period. These restrictions curtailed the market opportunity for the authorised logistics companies in giving priority to this business segment.

In addition, few MPEs showed interest in the policy, which was the outcome of the sector concentration of Brazilian MPEs in trade and traditional manufacturing of heavy items (e.g. furniture); the overall cost of exporting, especially by air; and the limited percentage of MPEs with the capacity to export. Lack of adequate promotion of the scheme to MPEs, as well as their general low knowledge of exporting, may also help explain the limited take-up of this policy.

De facto, as of mid-2019, Simples Exportação could already be considered dormant legislation. In October 2018, the DSE was replaced by the Single Export Declaration (Declaração Única de Exportação, DUE), a new export customs clearance document for all exporting companies regardless of their size. In addition, the DUE regulations state that in cases where the export shipment is by an express or postal delivery operator, an international express transport company or other logistics operator, this third party shall act as the declarant in the export operation. This suggests that the export shipments of MPEs, as well as exporters of all sizes, can be facilitated by these third-party arrangements.

It follows that it could make sense for the federal government to phase out Simples Exportação, especially considering its limited use so far. With respect to trade facilitation, it is probably more sensible to set rules that are simple for everyone, whereas micro and small companies will benefit more from other targeted policies discussed in this chapter, from access to export-related information to export training, from export finance to supplier development programmes.

Nonetheless, under the DUE, it will be important for the revenues and customs officials to collect data on the size of exporting companies to measure the proportion of MPEs among all exporting companies and their share of domestic exports in relation to the total. As well, further research and analysis of the trade facilitation barriers facing Brazilian MPEs would be worthwhile.

Export financing

The CAMEX Export Financing and Guarantee Committee (COFIG) is in charge of setting the terms and conditions of financial assistance to Brazilian exports. This includes overseeing the Export Financing Programme (Programa de Financiamento às Exportações, PROEX) and the Export Guarantee Fund (Fundo de Garantia à Exportação, FGE).

PROEX, implemented by Banco do Brasil, supports the export of Brazilian goods and services. It offers two forms of export support: i) PROEX Financing: this consists in direct financing (short-term or long-term) to the Brazilian exporter or to the importer of Brazilian goods (for up to 85%-100% of the export value); and ii) PROEX Equalisation: this instrument helps to offset the cost of credit obtained by either the exporter or the importer from a financial institution to finance Brazilian exports. However, the minimum revenue threshold of BRL 60 million per year that is necessary to qualify for PROEX financing makes most SMEs ineligible for this programme.

Aside from PROEX, there are three main export financing instruments that are relevant for SMEs: PROGER Export, BNDES’s direct export credit, and export credit guarantees.

PROGER Export is the main export financing tool for micro and small enterprises  

        

Funding for PROGER Export is allocated to Banco do Brasil from the Worker Support Fund (Fundo de Amparo ao Trabalhador, FAT). Through the programme, Banco do Brasil extends credit (of up to BRL 600 000 per transaction in national currency) to small enterprises with gross annual revenues of up to BRL 10 million, for the purpose of financing the production of goods for export (pre-shipment mode), as well as expenses related to export promotion. The credit line offers a competitive interest rate, a payment term up to 12 months, coverage of 100% of the export value or trade promotion expenses, a zero-tax rate on international financial transactions, and possibility of a supplementary credit guarantee from the Microenterprise Support Fund.

BNDES’s export credit reaches few companies  

        

BNDES offers three export financing solutions in which SMEs can participate: i) BNDES Exim Pre-shipment (direct credit to the exporter through a financial agent); ii) BNDES Post-shipment (both supplier and buyer credit); iii) and BNDES Exim Automatic, which offers importers of Brazilian goods access to BNDES financing through banks in their home countries.8

BNDES’s export credit products are well-conceived and useful; however, they reach only a very small number of SMEs, making their impact limited. In 2017, SMEs accounted for about 60% of the 1 500 exporters served by the pre-shipment credit line and for 40% of the over 100 companies which had used Exim Automatic (BNDES, 2018).

Export credit insurances for SMEs should be scaled up   

        

The Export Guarantee Fund (Fundo de Garantia à Exportação, FGE), which is operated under the responsibility of the Ministry of Economy, is financed through federal resources and through proceeds from the Fund’s own operations. The FGE supports the Export Credit Insurance (Seguro de Crédito à Exportação, SCE), which offers guarantees for export credit transactions against commercial, political and extraordinary risks that may affect the exports of Brazilian goods and services. As such, the government essentially plays the role of a “guarantor of last resort” to banks responsible for financing Brazilian exporters.

The Brazilian Guarantees Agency (Agência Brasileira Gestora de Fundos Garantidores e Garantias, ABGF) is responsible for structuring, managing and monitoring the guarantee operations, based on a contract with the Ministry of Economy. One of the FGE/SCE products is specifically meant for SMEs, i.e. the SCE/MPME which was started in 2015.

To be eligible for this product, companies must meet the definitional criteria set by CAMEX.9 No minimum transaction amount is required for this product, with the credit insurance that can cover the credit risk of all export transactions, both pre-shipment and post-shipment risks. One-third of the requests for SCE/MPME come from exporting companies (i.e. insurance against their own financing) and two-thirds from banks issuing credit to exporters. The default rate, as of early 2019, averaged 20% for the whole FGE/SCE portfolio and 15% for SMEs, although it was higher for certain riskier countries.

The use of SCE/MPME peaked in the first quarter of 2017, when it insured export transactions of USD 13.5 million, but dropped to USD 5 million in 2018. Budget constraints limit the number of projects that can be insured; in fact, the SCE/MPME insurance is not self-sustaining, to the extent that premiums and fees do not cover the administrative costs and indemnifications of the programme.

The SCE/MPME product not only is limited in scope, but it is also encumbered by processing issues at the Ministry of Economy, which are the result of fiscal responsibility rules that could nonetheless be simplified (e.g. collecting premiums and distributing pay-outs on guarantee defaults). There also needs to be improvements in the risk assessment and pricing methodologies of SCE/MPME if this export credit insurance is to be used more widely.

Finally, educating SMEs on the use of export credit insurances also remains a challenge. In 2018, the ABGF was carrying out an analysis of the experience of companies that used this type of insurance compared to others that did not. This assessment could offer insights on the incremental impact of export credit insurances on the export activity of SMEs and could help build the case for increasing budgetary resources for this credit policy instrument.

Tax-based export incentives

Tax-based export incentives should be made more predictable   

        

Brazil operates a Special Regime for Re-integration of Tax Values for Exporting Companies (Regime Especial de Reintegração de Valores Tributários para as Empresas Exportadoras, REINTEGRA), which is also meant to encourage exporting. REINTEGRA allows eligible exporter companies to recover residual tax costs incurred in the export production chain through a tax credit of 0.1% to 3% of their total export revenues, depending on the year and type of products exported.10 The government has, indeed, the prerogative to set the amount of the tax credit on an annual basis,11 which however adds an element of unpredictability to this policy, making it difficult for eligible companies to do long-term export plans. The REINTEGRA percentage tax credit should preferably be stabilised to facilitate long-term export planning by Brazilian companies.

E-commerce and online trading

E-commerce can go a long way in boosting SME exports   

        

An important option for increasing the export activity of SMEs is by increasing their capacity to sell online. For example, the UN Economic Commission for Latin America and the Caribbean (ECLAC), based on survey data on cross-border e-commerce by firms in the LAC region, shows that firms selling online have more diversified export markets, with 49% selling to three or more markets, compared to 12% of firms exporting only through traditional channels (ECLAC, 2018). Thus, engaging more SMEs in cross-border e-commerce can help diversify export markets in Brazil, one of the objectives of the PNCE.

Chapter 2 of this report shows that a lower proportion of Brazilian companies has a presence online through a company website than any OECD country, although 21% of small enterprises (10-49 employees) report having received orders online, above the OECD median value of 19.6%. A 2018 SEBRAE survey on the digital transformation of MPEs additionally reports that 23% of the interviewed companies sell their products online, although 43% have a website (SEBRAE, 2018b). There is, therefore, the potential for expanding the use of e-commerce by SMEs in Brazil starting from a relatively good initial base of information and communication technology (ICT) and Internet business users.

In March 2018, the government established an Inter-ministerial Committee for the Digital Transformation, which was co-ordinated by the Civil Office of the President of the Republic and tasked with reviewing legislation and regulations on the digital economy, including those affecting e-commerce. A Subcommittee on Electronic Commerce and Exports was also formed to propose actions that could foster the use of domestic and international e-commerce. Key actions in the 2018-19 Subcommittee’s work plan are: establishing agreements and partnerships with international marketplaces, supporting the development and use of digital means of payment, and integrating logistics and taxation within the context of e-commerce. The Subcommittee is also in charge of developing actions to support SMEs in e-commerce.

Apex-Brasil is the main institutional player in e-commerce support   

        

Apex-Brasil has been one of the first government entities to offer e-commerce support for SMEs, with the launch in 2017 of the e-Xport Brazil programme, whose aim is to raise awareness among Brazilian companies of business opportunities in e-commerce.12 This programme includes training and mentoring on how to develop an appropriate global marketplace strategy; preparation of market intelligence studies; promotion of strategic partnerships with main e-commerce players; and individualised consultancies (Apex-Brasil, 2018). Given an analysis of the main e-commerce trends and opportunities, Apex-Brasil identified Argentina, China, Mexico and the United States as key targeted markets. In 2018, the programme had attracted interest from 700 Brazilian companies and was negotiating strategic partnerships with more than 10 marketplaces in the target countries. Apex-Brasil is also developing partnerships with Alibaba and Amazon.

Trading online vouchers could help spread the use of e-commerce  

        

Going forward, the government could consider the use of trading online vouchers to further prompt more SMEs into e-commerce. The concept of the voucher is not new to Brazil, which already offers innovation vouchers (see Chapter 5). In this regard, the Ireland example of the trading online voucher could be of interest to Brazil (see Box 6.3).

Box 6.3. International learning model – Ireland’s trading online voucher scheme

Description of the approach

The trading online voucher (TOV) scheme was launched in Ireland in mid-2014 with funding from the Department of Communications, Climate Action and Environment under a strand of the National Digital Strategy to encourage micro-enterprises (defined in Ireland as enterprises with 10 or fewer employees and less than EUR 2 million in turnover) to develop their online trading capabilities and invest in the latest digital tools to expand their markets. It is delivered by the network of 31 Local Enterprise Offices (LEOs) throughout the country. The aim of the TOV is to close the trading online gap between the largest and smallest enterprises by addressing some of the perceived barriers, including financing and know-how.

The scheme offers a financial incentive of up to EUR 2 500 on a 50-50 matched funding basis, along with training, mentoring and networking support. The TOVs target businesses with no or limited online trading presence and at least 12 months of operation. The voucher can be used to purchase Internet-related software, development of an app, development or implementation of a digital marketing strategy, ICT consultancy services, and/or training and skills development on establishing and managing an online trading activity.

It is attracting micro-enterprises, including sole traders, from a diverse range of sectors, including arts and crafts, clothing and shoe shops, food suppliers, farm producers, manufacturers, and professional services. In 2017, 1 189 micro-enterprises were awarded TOVs, bringing the total to 4 127 since mid-2014. The goal in 2018 was to award the TOV to an additional 1 500 businesses. The micro-enterprises availing of the TOV averaged around four employees.

The impact assessment of 800 businesses in early 2016 found positive results:

• Users experienced an average increase in sales of 21%.

• 84% experienced an increase in customer enquiries.

• 73% reported that the new online business did not displace existing sales, but actually generated additional sales.

• 60% of the businesses began to export.

• 89% said that the trading online component would become a more important component of their business in the next 6 months.

Success factors

The success of the scheme is based on a number of factors. The first refers to the efforts of the LEOs to promote the scheme through a series of information sessions across the country. These sessions covered a range of topics, including developing a website, digital marketing, social media for business, and search engine optimisation. On a regular basis, the LEOs also offer trading online seminars during which business owners are given tips on selling online, followed by an explanation of the TOV scheme. To apply for a TOV, the business owner has to first attend one of these seminars.

Second, the LEOs were also able to provide referrals to e-commerce training providers and expert consultants with whom the voucher recipients could engage to receive the support most suited to their needs.

Obstacles and responses

Creating widespread awareness among micro-enterprises was necessary to promote the TOV scheme and interest in learning more about the benefits of trading online and how to establish their own online presence. To promote the programme, the LEOs delivered information seminars in their communities, which initially reached over 10 000 businesses.

Feedback from stakeholders has also suggested that the value of the voucher is too low considering the amount of professional assistance that may be required. Ireland is considering increasing the voucher value for micro-enterprises, although it is cognisant of the cash flow implications for the smallest firms given the matching contribution requirement. Finally, it is also being considered to allow enterprises to receive a second voucher to consolidate further their e-commerce capability and online presence.

Relevance for Brazil

In 2018, retail e-commerce sales in Brazil amounted to approximately USD 25.4 billion, and are projected to grow to USD 32.6 billion by 2022. If SMEs can be more aggressively supported in developing their e-commerce capabilities and use of digital platforms and marketplaces, this would generate increased sales from both domestic and export markets. A trading online voucher scheme could help Brazilian SMEs to engage in e-commerce and expand into international markets.

For further information

Local Enterprise Office, Ireland (https://www.localenterprise.ie/Discover-Business-Supports/Trading-Online-Voucher-Scheme-/); Department of Communications, Climate Action and Environment (DCENR), Dublin at: https://www.dccae.gov.ie/en-ie/communications/topics/Digital-Strategy/trading-online-voucher-scheme/Pages/Trading-Online-Voucher-Scheme.aspx/; DCENR (2016), Growing Small Business through Online Trade: Enterprise Impacts of the Trading Online Voucher Scheme, https://www.dccae.gov.ie/en-ie/communications/publications/Pages/Online-Trade-Impact-Report-May-2016.aspx/.

Supplier development programmes

Supplier development programmes, including MNE-SME linkages, should be more actively supported   

        

Brazil is much less integrated into global markets than other large emerging economies (OECD, 2018). This reflects several decades of inward-oriented policies, including an industrialisation strategy through import substitution. Trading little, Brazil has remained on the side-lines of global value chains (GVC) (see also Chapter 3).

So far, there has also been limited focus on SMEs in Brazil’s FDI attraction policies, although this topic is increasing in importance as specific chapters on SMEs are being negotiated into regional and bilateral trade agreements. Stronger linkages between multinational enterprises (MNEs) and local SMEs typically benefit SMEs by exposing them directly to foreign technology and indirectly to foreign market knowledge. Brazil has some examples of supply chain initiatives targeting SMEs, but these are not sufficiently focused on integrating SMEs into the supply chains of exporting firms or Brazil-based MNEs. In fact, there is a feeling among some policymakers that favouring linkages between MNEs and local SMEs could result in “selling out” domestic enterprises to foreign companies.

Brazil’s main supplier development initiative is SEBRAE’s National Productive Chain programme, which aims to bring small enterprises into supply relationships with large domestic companies. In this programme, SEBRAE and the large company (anchor firm) jointly define the product or service requirements that need to be met by suppliers. Subsequently, SEBRAE develops together with the potential small suppliers an action plan to meet such requirements, which could include training courses or tailored consulting services. When the small businesses are ready to become suppliers, they are matched to the anchor firm.

This programme has hitherto supported more than 255 projects in 25 States, benefited 65 000 small businesses and 170 medium and large partner companies, and resulted in BRL 6.6 billion worth of business (SEBRAE, 2017). Although an evaluation of the programme in 2014 produced favourable results, both for the participating small businesses and the anchor firms, it did not consider the contribution of small business suppliers to export outcomes, either indirectly or directly (SEBRAE, 2014).

An improvement to the programme would be to target large export-driven MNEs among the selected anchor firms, with the objective of exposing domestic SMEs to foreign technology and global supply chains. The example of the ACT model in Mexico could be of inspiration for Brazil (see Box 6.4).

Box 6.4. International learning model – Mexico’s Model for Alliances with Transnational Companies (ACT)

Description of the approach

The Model for Alliances with Transnational Companies (ACT Model) was designed by the federal government of Mexico with the express purpose of increasing the domestic content of the products exported by the MNEs in Mexico, improving the participation of Mexican SMEs in global supply chains, and attracting more FDI into the country. ProMéxico, the export and investment promotion agency of Mexico, works with over 50 MNEs under the ACT Model mechanism, focusing primarily on automotive, auto parts, aerospace, electrical, and metal-working sectors.

The ACT Model tracks the production processes of Mexico-based MNEs so that it can identify domestic SMEs best suited to meet the supplier needs of these MNEs. ProMéxico officials first conduct a series of interviews with the MNE to better understand its supply requirements, its plans to open up new manufacturing lines in Mexico, purchase targets, types of input materials, and the minimum supplier requirements. Upon agreement to participate in the programme, the MNE submits its specific requirements to ProMéxico. Based on this intelligence, the ACT programme develops a shortlist of suppliers, which involves a technical inspection of the potential suppliers’ plants to assess their inputs, machinery, production processes, capabilities and capacity. Once the MNE has selected the potential suppliers, the MNE and ProMéxico schedule business meetings with the shortlisted companies and conduct plant visits. The MNE makes its choices, provides an estimate of purchase figures, and submits a project proposal to the ProMéxico’s approval committee.

The ACT Model has succeeded in increasing the share of local content into Mexican exports and providing a reliable means of monitoring the productive capacities of Mexican SMEs. Between 2013 and 2015, the business volume between MNEs and SMEs within the framework of this programme was valued at about USD 13 billion, with 487 SME clients which had become suppliers.

Success factors

Key to the success of the ACT programme is the proactive position taken by ProMéxico to collect information on the procurement needs of MNEs and to develop a database of Mexican SMEs with a supplier profile. The shortlist of suppliers is identified from the ProMéxico databases of company profiles, which contains domestic suppliers meeting certain criteria, such as experience in supplying MNEs, a quality and safety culture, technological infrastructure, and trained employees with language capability. This is complemented by the efforts of ProMéxico teams to promote the ACT programme to MNEs and facilitate the match-making process. Another key to success is the assistance provided to suppliers to improve quality standards and technical know-how.

Obstacles and responses

Being able to match MNEs with local suppliers requires a database of domestic company profiles. Thus, one has to be put together. In Mexico, this was accomplished by collecting data from domestic manufacturing firms on a “supplier capacity profile” form. This form captures information on the supplier’s main products, quality and standards certifications, main Mexican customers, and sales parameters in the last three years. Company information is also sourced by ProMéxico from chambers of commerce and industry and state governments.

Identifying a large number of domestic SMEs with the right supplier profile can be a challenge. ProMéxico overcame this challenge by offering programmes to support the upgrading and modernisation of manufacturing SMEs to help them meet the supply requirements of MNEs. This was achieved by fostering collaboration with other government agencies with mechanisms in place to promote the growth or development of suppliers, such as the national SME agency, the Foreign Trade Bank and the National Development Bank.

Relevance for Brazil

Brazil is a less open country to trade than others in Latin America and is, therefore, less connected to global value chains. In addition to further lowering tariff and non-tariff measures, Brazil could increase the participation of SMEs in GVCs by adopting a programme similar to the Mexican ACT Model. This could be facilitated by Apex-Brasil in co-operation with the Ministry of Economy, the MRE and SEBRAE, with the BNDES on the side to make financing available to SME suppliers for quality and process upgrading.

For further information

ProMéxico (2016b), Global Value Chains: A Model for the Integration of Mexican Companies, Mexico City.

Conclusions and policy recommendations

Increasing the number of SMEs exporting to foreign markets is a priority of the federal government of Brazil. As shown in Chapter 2, very few micro and small companies operate in international markets, which is partly the result of a large majority of them working in non-tradable sectors but also, more generally, of the limited integration of Brazil in international markets.

The National Plan of Exporting Culture (PNCE) is an important federal initiative aimed at turning non-exporters into exporters. The PNCE follows a logical framework based on five steps to lead companies to export. On the whole, it is a well-designed programme which would nonetheless benefit from more quantifiable targets, including with respect to the increase in the number of exporting companies. Alongside the PNCE there are also other export training opportunities in Brazil, notably through Apex-Brasil which operates the Export Qualification Programme.

Trade facilitation policy targeted at SMEs has mostly occurred through Simples Exportação, a simplified export regime reserved to MPEs under Simples Nacional. This regime was based on the use of a Simplified Export Declaration for export shipments not exceeding USD 50 000 in each consecutive six-month period. The use of this policy, however, has been limited and has not produced the anticipated result of increasing the participation of MPEs in Brazilian exports. The Single Export Declaration, a further simplified customs declaration that applies to all exporting enterprises regardless of their size, has recently replaced the Simplified Export Declaration, making a case for Simples Exportação to be phased out.

Finally, there is scope for further encouraging the use of e-commerce by SMEs and the participation of SMEs in global supply chains through nurturing stronger linkages between multinational enterprises and SMEs. Surprisingly, in fact, there is no dedicated programme to build stronger relationships between Brazil-based MNEs and local SMEs, although this could offer an important opportunity for Brazil to tap into global supply chains.

Policy recommendations on SME export policies

• Take into consideration the needs of SMEs in the trade policy dialogue within CAMEX, especially with respect to export promotion, by involving organisations such as Apex-Brasil, SEBRAE, BNDES and ABGF.

• Favour the inclusion of SME representative bodies in the consultations of the CAMEX Trade Facilitation Committee (CONFAC) with the private sector.

• Produce a Guide to Exporting for MPEs that covers special programmes, provisions, and simplified regulations that apply to this business segment (e.g. export training, export finance mechanisms, etc.).

• Implement a management information system to track SMEs participating in the National Plan of Exporting Culture (PNCE) through the exporting path laid out by the programme. In this context, set up quantifiable targets to measure how many SMEs have become active exporters after participation in the PNCE.

• Expedite the PNCE process of mapping state-level export supports in all 26 Brazilian states and the Federal District. In the process, develop a searchable web-based system of local institutions involved in export promotion.

• Set up a monitoring system to track the progression of participants in the Export Qualification Programme (PEIEX) of Apex-Brasil, from training through participation in trade missions to an active exporter status.

• Improve the risk assessment and pricing methodologies of the SME export credit guarantee (SCE/MPME) and increase its awareness among SMEs.

• Consider phasing out the Simples Exportação regime given its limited use among MPEs and the introduction of a new simplified Single Export Declaration applicable to all companies regardless of size.

• Stabilise the percentage tax credit under the REINTEGRA regime to make it more favourable to exporters, or alternatively give enough notice of rate changes to favour long-term export plans by companies.

• Support the creation and consolidation of export consortia in Brazil to help SMEs with similar products and distribution channels to reach export markets they would not have the resources or capacity to target individually.

• Consider offering trading online vouchers to help SMEs develop their digital capacity for e-commerce.

• Use supplier development programmes to promote business linkages between local SMEs and MNEs, with a view to increasing the participation of Brazilian SMEs in global supply chains.

References

Apex-Brasil (2018), “Apex-Brasil: Relatório de Gestão do Exercício de 2017”, Ministério das Relações Exteriores, Brasília, http://www.apexbrasil.com.br/uploads/Relat%C3%B3rio%20de%20Gest%C3%A3o%202017%20-%20Final.pdf.

BNDES (2018), Annual Integrated Report 2017, Banco Nacional de Desenvolvimento Economico e Social, Rio de Janeiro.

CONFAC (2018), “Relatório de Atividades de 2017 e 2018”, Comitê Nacional de Facilitação de Comércio, Brasília, http://www.camex.gov.br/images/PDF/Confac/Item-9---Relatrio-atividades-Confac-2017-2018-ATUALIZADO.pdf.

DCENR (2016), Growing Small Business through Online Trade: Enterprise Impacts of the Trading Online Voucher Scheme, Department of Communications, Energy and Natural Resources, Dublin. https://www.dccae.gov.ie/en-ie/communications/publications/Pages/Online-Trade-Impact-Report-May-2016.aspx/.

ECLAC (2018), International Trade Outlook for Latin America and the Caribbean Stronger regional integration urgent to counter impact of trade conflicts, Economic Commission for Latin America and the Caribbean, Santiago, Chile.

OECD (2018), OECD Economic Surveys: Brazil, OECD Publishing, Paris, https://doi.org/10.1787/19990820.

OECD (2017a), “Enhancing the Contributions of SMEs in a Global and Digitalised Economy”, Meeting of the OECD Council at Ministerial Level Paris, 7-8 June 2017, OECD, Paris, https://www.oecd.org/industry/C-MIN-2017-8-EN.pdf.

OECD (2017b), “Trade Facilitation in Brazil: Analysis and Policy Options”, Working Party of the Trade Committee, Trade and Agriculture Directorate, OECD, Paris, http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/TC/WP(2017)24&docLanguage=En.

ProMéxico (2016a), Creating Synergies to Compete – RedExporta: A Programme for Creating and Strengthening Export Networks in Mexico”, Mexico City.

ProMéxico (2016b), Global Value Chains: A Model for the Integration of Mexican Companies, Mexico City.

SEBRAE (2018a), As Micro e Pequenas Empresas nas Exportações Brasileiras: 2009-2017 Brasil, Brasília, https://datasebrae.com.br/wp-content/uploads/2018/11/As-Micro-e-Pequenas-Empresas-nas-Exporta%C3%A7%C3%B5es-Brasileiras-2009-2017-Brasil-VF.pdf.

SEBRAE (2018b), Transformação Digital nas MPE, Brasília, https://datasebrae.com.br/documentos/.

SEBRAE (2017), Encadeamento Produtivo: Bons Negócios Conectando Pequenas e Grandes Empresas”, Brasília, https://m.sebrae.com.br/Sebrae/Portal%20Sebrae/Anexos/Folder%20EP%20atualizado%20-%20set.%202017.pdf.

SEBRAE (2014), “Encadeamento Produtivo: Estratégia para Atuação do Sistema”, Brasília.

Upper-Quartile (2013), Evaluation of Scottish Enterprise Engagement with Account Managed Companies, Scottish Enterprise, http://www.evaluationsonline.org.uk/evaluations/Search.do?ui=basic&action=show&id=530.

Notes

← 1. As elsewhere in the report, a distinction is made in this chapter between MPE and SME. MPE stands for micro e pequena empresa (micro and small business), based on the definition of Lei Complementar 123/2006 (annual turnover up to BRL 4.8 million). SME refers more generally to the small and medium enterprise segment, which generally goes above the abovementioned turnover threshold and up to 250 people employed, based on the OECD definition.

← 2. According to Lei Complementar 123/2006, micro-enterprises are those with annual turnover below BRL 360 000; small enterprises those with annual turnover between BRL 360 000 and BRL 4.8 million; and medium enterprises those with annual turnover between BRL 3.6 million to BRL 30 million.

← 3. Further information on export activity by firm size is presented in Chapter 2 of the report. Chapter 6 only focuses on the policy support framework for SME export promotion.

← 4. Non-tradable sectors include mostly services that are locally provided and difficult to trade, such as retail trade, health or education.

← 5. The client service model of the PNCE was first developed and applied in different states by Brazil’s National Industry Confederation (CNI). Eventually, CNI transferred this model to the Ministry of Economy.

← 6. Topics covered in the “Learning to export” website include: Why export; Planning to export; Knowing important themes (e.g. trademarks, certifications, logistics and distribution, e-commerce, export tax incentives); Identifying markets; Product suitability to the markets; Promoting the products; Negotiating with the importer; Operationalising the export; Where to get support (with links to the PNCE, the CNI International Business Centres, Apex-Brasil, etc.).

← 7. Comerciais exportadoras (commercial exporting companies) are companies whose activities include the trading of goods.

← 8. In BNDES Exim Automatic, BDNES disburses a loan to the importer of Brazilian goods through a local intermediary bank in national currency. The bank of the importer abroad, which approves the credit, makes the payment to BNDES through a representative bank in Brazil.

← 9. CAMEX (by resolution in May 2015) defines SMEs as companies with revenues up to BRL 90 million and exports up to USD 3 million in the calendar year prior to the application. However, medium enterprises, with up to BRL 300 million in revenue and up to USD 5 million in exports, are also eligible.

← 10. The products that benefit from this scheme include milk and its derivatives, equipment, automotive vehicles, including parts and components, steel, sugar, ethanol, meat products, fruit and nuts, plus many others. The tax benefit is only applicable to the export of products manufactured in Brazil and containing from 40% to 65% of national content, depending on its classification in the Tax on Industrialized Products List.

← 11. In May 2018 the government reduced the REINTEGRA tax credit from 2% to 0.1%.

← 12. SEBRAE also operates training programmes for MPEs about the use of e-commerce.