Promoting Industrial Diversification

Article excerpt

Sugar has been the foundation of Pemambuco's economy for centuries and, only a decade ago, 42 large sugar refineries accounted for up to 15% of the state's gross domestic product. Today, that share has slipped to 5%, as 14 of the traditional sugar operations have shut down and another nine are in precarious financial condition.

The industry still has enormous importance and is a major employer in Pernambuco and the region, but the emphasis today is clearly toward building a more diversified industrial base. Says Sergio Guerra, the state secretary of industry, trade, and tourism: "It's time to bury the ghosts of the past. We have to end backwardness once and for all."

To do that, the government has identified a number of highpriority investment projects that will jump-start or reinforce industries that will be attractive to foreign and Brazilian investors, while also creating new, higherpaying jobs in one of the country's poorest regions. Both federal and state incentives are available for all these projects.

State director of communications Ricardo Leitao points out, that Pernambuco has the secondlargest consumer market in Brazil's northeast region and a concentration of major shopping centers, trucking companies and retail services companies. "We have the second-largest per capita gross domestic product, and the largest number of universities in the region," he says. "We alsohave the largest number of PhDs, and our training programs for computer sciences, physics and biology are tops. This gives us some definite advantages on the human resources side."


A key project now under study is the construction of a 700megawatt thermal power plant on the grounds of the Suape port complex. The project would be developed by state electrical distribution company Celpe with private partners to cover regional energy deficits expected after 2005. The plant's generators would burn natural gas from other states in the Northeast.


Some 200 types of granite have been identified in Pernambuco, with 50 of them having immediate commercial value for flooring, walls, and stone furniture. Reserves now being exploited are located 250 miles west of Recife and Suape, with production of finished granite growing from 8,000 square meters a month to 36,000 square meters a month over the past three years. About 70% of this output is consumed in Pernambuco, 5% in southern Brazil, and the rest exported-mainly to Europe and Japan. The upcoming privatization and reactivation of the state railway network in the granite-producing region is expected to boost quarrying activity. …