THE BLOG

The Road to Rio Is Not Running Smooth

14/04/2014 12:44 BST | Updated 11/06/2014 10:59 BST

Last month, Brazil's Sports Minister admitted that the country should be better prepared at this stage for the World Cup and has been too slow to get ready for the 2016 Olympics. As the countdown to the start of the World Cup on June 12 begins in earnest, three stadiums remain unfinished, while several transport projects have been withdrawn completely. Fifa has been left red-faced, with Sepp Blatter facing questions about whether Brazil was the right country to be awarded the World Cup.

However, Brazil's poor record in delivering major infrastructure is not just impacting on its ability to host global sporting events.

Brazil's Secretariat for Social Communication (SECOM) recently announced a reviewof its international public relations assignment, which now aims to reposition the country's global reputation by focusing specifically on its critical agribusiness sector. Agribusiness accounts for almost 25% of Brazil's GDP and employs up to 16% percent of all workers. It is well-regarded at home: as MHP wrote in our Effective Communications Index 2014, Brazilian food and drink manufacturers stand out head and shoulders above other sectors as the most effective communicators in the country. SECOM now wants to take that talent for communication ‎to a wider, global, stage.

However, in practice the biggest thing holding back the Brazilian food and drink sector is not communications but rather the poor state of domestic infrastructure. The poor reputation of the Brazilian transport sector revealed in our Index reflects the difficulties it faces in delivering what Brazilians need and expect.

Poor quality infrastructure is a major problem for all business in Brazil - the World Economic Forum ranks the country at 114th (out of 148) in terms of the quality of its infrastructure. It is a major part of the infamous'Custo Brasil' that impacts all businesses operating here: the higher costs associated with doing business in Brazil compared to other countries.

A recent article by the Economist highlighted this through comparisons of the cost of an iPhone 5s in various different nations. The handset will reportedly set you back 2,519 reais ($1,076) in Brazil, where the average monthly income is just under 2,000 reais. This compares to the US price for the same phone of around $700. The FT put it another way,

"the price of a shoe shine in central São Paulo was R$10 (about $6) before a tip while one from a Brazilian shoe shiner working the New York office market was $5 including tip."

Higher labour costs, expensive commercial property, and high import taxes and national and state levies - as well as extra costs associated with Brazil's aging infrastructure - mean that the costs of doing business here are amongst the highest in the world. With the economy not now progressing as it once was, many businesses are thinking twice about setting up operations here, despite Brazil's status as a MINT economy.

With the World Cup now exactly three months away, Brazil will be trying hard to position itself on the world stage as a destination of choice to businesses and investors as well as sports fans and tourists. But with the Custo Brasil making it hard for businesses to succeed here SECOM might do well to focus on raising the reputation of the country's much-maligned infrastructure sector rather than its already well-regarded food businesses.‎