Brazil Strives to Tempt Settlers to a 'Silicon Valley' the South American Nation Launches a Program to Boost Its Global Software Market Share to 1 Percent by 2000

Article excerpt

RESIDENTS of seaside Florianopolis like to call software developer Paulo Guimaraes "our Bill Gates."

The 35-year-old former motorcycle racer and founder of a software company here, has won prizes for his ground-breaking inventions, including an infrared wireless communications system he hopes to sell to Chicago's commodities market.

Mr. Guimaraes, who studied computer science in the United States, is one of several up-and-coming entrepreneurs who local officials say are turning this picturesque island resort into a South American Silicon Valley.

"We know it sounds like a dream," says Rodolfo Pinto da Luz, director for computer development of Santa Catarina state. "But we have the talent and the will to become a Brazilian Silicon Valley."

Several up-and-coming software firms are located throughout the state. But it's new software haven, dubbed "Tecnopolis," is here in Florianopolis.

Today, Tecnopolis is home to only 50 employees, with one completed building -- a fiber optic telecommunications company -- and another under construction. But 12 Brazilian companies and a German software firm called Baden-Baden have bought lots and are expected to begin construction soon.

"The combination of Florianopolis's beauty and state incentives will lure many companies here," predicts Neri dos Santos, Santa Catarina's secretary of state for science and technology.

Those incentives include $3 million in infrastructure, selling land at 10 percent below the market value, easy credit for research projects, and property- and excise-tax exemptions.

Moreover, small firms without sufficient capital can qualify to use the "incubator," a mini-industrial park that provides hefty discounts on laboratories, equipment, business services, phones, and even the omnipresent "cafezinho," or little coffee, delivered by uniformed waiters. Industry experts say this will help reduce the industry's two biggest problems here: poor management and lack of capital.

Softex 2000

Currently, a national incentives program called Softex 2000 aims to boost the nation's global software market share to 1 percent by the end of the decade. Brazil's current $1 billion industry makes up only 0.5 percent of the world market. United States companies have captured an estimated 50 percent.

Softex 2000 hopes to create 200 software companies and 50,000 jobs in 14 urban areas, or "poles," including three in the state of Santa Catarina.

Despite the generous incentives, state officials have had problems wooing international firms. Foreigners are wary of a return of Brazil's chronic inflation, even though the new President Fernando Henrique Cardoso's current economic plan has tamed it. Other causes for concern are a lack of enforcement of copyright laws, existing tariffs, and the federal government's infamous red tape.

Attracting US companies

To date, officials here say representatives of IBM Corporation, Apple Computer Inc., Microsoft Corporation (chaired by Bill Gates), and Olivetti, based in Ivrea, Italy, have visited Tecnopolis and expressed interest. John Andara, owner of the Miami-based Zyx Corporation, says he will relocate if state officials fulfill their commitments. But he says he doubts other US firms will follow without a fundamental change in Brazil.

"It's painful to do business in Brazil. It's so bureaucratic," he says. …