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| Going Down to Rio No siestas for investors by Diana Brebner ¡Hola! The Latin American market is buzzing. Latin America has rebounded from the financial crisis and economic recession that plagued the region in the '90s. Investors are waking up to exciting possibilities in the markets for communications and information technology (IT) products and related services, including the Internet and e-commerce technology. Countries such as Brazil and Argentina, which suffered for years from hyperinflation, have taken aggressive steps to stabilize currencies and their respective economies. These steps appear to be paying off. Latin American firms and governments are now in a better position to invest in IT, and an elite of affluent consumers are poised to spend their disposable incomes on advanced technology, Internet access and e-commerce. These planned investments are stimulated largely by the perception that IT, the Internet and e-commerce are key to improved productivity and international competitiveness. Governments in some countries, such as Brazil and Argentina, are initiating programs to help businesses, schools, government agencies and other organizations increase their IT investment. Many Latin American companies are eager to learn about the benefits of e-commerce and are interested in purchasing the equipment and services needed to go on-line. It would be a mistake, however, to approach Latin America as a single market: the cultural, linguistic and economic diversity of these southern countries is quickly apparent. Latin America consists of over 40 South American, Central American and Caribbean nations. Currently, Brazil (where the national language is Portuguese, not Spanish) and Argentina are the largest South American markets, and offer excellent opportunities for astute investment and business development. Brazil Brazil, the largest and most industrialized country in South America, has a population of 168 million and a teledensity of 16.8 with most telephone service centered in 11 cities with populations over one million. Almost half of the main telephone lines in South America are deployed in Brazil, as well as 50% of the computer market with approximately 12 million computers installed.
The Brazilian government encourages Internet use and IT development. Brazilians may file their income taxes and pay government-related bills electronically. ProInfo is a government program focusing on the use of IT in the public school system. The goal is to have installed over 100,000 personal computers in Brazilian schools by the end of 2000. Brazil is a signatory to the World Trade Organization (WTO) Basic Telecom Services Agreement. The government supports its domestic IT industry with initiatives, such as financing programs for start-ups, and with Softex, a program to encourage the domestic software industry. Software piracy is a recognized problem throughout Latin America and international pressure continues as Brazil struggles with enforcement of anti-piracy regulations. The banking sector is particularly advanced in its adoption of new technology and offers sophisticated services to its customers. Although Brazil's banks are wary, and interest rates are high, the banks' investment and confidence in the IT industry continues to grow. In the telecommunications sector wireless is strong and the high level of activity in the build-out of submarine fiber-optic cable lines, bodes well for the future. Argentina
The IT "early adopters" in Argentina have, not surprisingly, been the telecommunications companies as they prepared for full market liberalization in November 2000. Privatization is also the new reality for formerly public utilities, such as electric and water companies, and the national rail system. As a result, there has been serious investment in new, competitive technologies, such as high-tech billing systems and business management software. In contrast to the situation in Brazil, the banks and financial institutions in Argentina have not made any substantial commitment to automation, computerization or IT in general. For historical reasons, many Argentines do not trust or use banks. Cash is still the preferred tender for most domestic and business transactions. However, the country's economic and political situation has stabilized over the past decade and the use of banks, credit cards and financial services is slowly increasing, as is the automation of the banking system. Educational and government institutions are not heavy users of IT, although this is not because of a lack of interest, but rather due to past financial restraints. Once again, as the economic situation continues to improve, the current government has shown great interest in addressing the issues associated with getting Argentina "on the information superhighway." The build-out of fiber optic networks and recent foreign investment in mobile, cellular and PCS services has created a promising environment for IT investment and the sales of associated products and services, such as OSS software, deployment and training. Knowing the territoryLatin American business leaders stress that there are many business opportunities in their countries and that they welcome and actively seek partnerships, investment and expertise. They offer the following advice for those businesses seeking entry into their markets:
¡Buena suerte! From Current OSS, Winter 2001, Vol. 2, No. 2. Published by Eftia OSS Solutions. |
Argentina was also deeply affected by the financial recession in the '80s, especially by the devaluation of the Brazilian real, the currency of Argentina's major trading partner. Recent economic recovery has been slow but steady, with a 3% rate of growth predicted for 2000. Unlike the situation in many other Latin American countries, the distribution of income in Argentina is relatively equitable, with the gross domestic product (GDP) per capita at approximately $9,000. The Argentine population, concentrated for the most part in and near Buenos Aires, is highly literate and pro-technology. Computer and IT use in business and industry is advanced and supported by one of the most up-to-date telecommunications systems in Latin America. Nonetheless, computers and IT are not yet a common aspect of daily life for Argentineans. Relatively high per call charges for telephone use deter domestic Internet use. At the end of 1999 fewer than 4% of Argentineans had Internet access. Computer use in Argentina's schools is also very low, although it has been growing in the past few years.