* By Rodolfo Fücher
Brazil, the country of the future that never arrives, or has arrived and someone hid it? As the world's breadbasket, the country has immense potential for the development of several sectors. Now, we need to focus on solutions to existing challenges and find ways to continue to foster innovation and internal competitiveness. The current political and economic stability marks a promising future, with forecasts of a consolidated SELIC at the level of 4.5% and inflation between 3.5 % to 4.0%, and with the legislative and executive focused on resolving the fiscal tangle - but with a very high risk of complicating the situation.
When we look specifically at the information technology (IT) sector, an essential fuel for digital transformation that serves as the basis for disruptive business models by generating countless opportunities, all indicators are extremely positive.
According to the latest study “Brazilian Software and Services Market”Of ABES with IDC, the growth of the IT sector in Brazil is above the world average, and totally detached from the Brazilian GDP. In 2018, we registered a growth of 9.8% against the world average of 6.7% - in 2019, the expectation is for an internal growth of 10.5% against 4.9% global. Considering these data, the development of the sector in 2020 should be no different, reaching close to 15% and, who knows, reaching the mark of US$ 60 billion in revenue, surpassing Canada, which is currently the 8th largest world market, a position above of Brazil.
Other indicators that corroborate with a positive expectation for 2020 are the results of studies by EY, Deloitte and McKinsey, which point, respectively, that 80% of CEOs see technological innovation as a way to keep the company competitive, 74% of executives should adopt new technologies , and 73% of the companies will seek new technological solutions, such as Industry 4.0.
Reinforcing the importance of technology and innovation for the country's development, a survey carried out in 2017 by Anprotec (National Association of Entities Promoting Innovative Enterprises) and the MCTIC (Ministry of Science, Technology, Innovations and Communications) pointed out that there were 363 incubators for innovative businesses and 57 accelerators, with 3,694 incubated companies, responsible for the creation of 14,457 jobs. Shortly thereafter, Lavca (Latin American Venture Capital Association) reported that around US$ 2 billion was invested in Brazil in 2019, which certainly helped in the emergence of 11 Brazilian unicorns and in the creation of numerous other Brazilian startups and companies.
Now, considering the consumer side, the IBGE (Brazilian Institute of Geography and Statistics) points out that 70% of Brazilians (126.9 million) use smartphones and that the country is the fourth in number of internet users - according to the Global Digital Report, Brazil ranks second in the average internet usage, with 9.5 hours per day per user. In this way, we can see the strong relationship between the development of innovative digital businesses, supported by technology, and their impact on the population, which can be exemplified with the proliferation of online platforms that aim to simplify daily consumer processes, such as NuBank, QuintoAndar, iFood, among others.
Looking to the not-too-distant future, data indicate that the IoT can generate a gain for the Brazilian economy in the order of US$ 200 billion by 2025. ABES study with IDC points to growth in this market above 20% a year until 2022 and demonstrates that in 2018, the IoT generated about US$ 7 billion and is expected to reach the US$ 9 billion mark in 2019. Additionally, for PwC Artificial Intelligence will become the biggest commercial opportunity, being able to contribute US$ 15.7 trillion to world GDP in 2030 - in Latin America the impact could reach US$ 500 million, representing 5.4% of the region's GDP.
On the other hand, despite the positive indicators, there are countless challenges that label Brazil as a country that is not for amateurs, which, unfortunately, is still true. According to the Global Competitiveness Report, published in 2019 by the World Economic Forum, despite the positive advancement of one position, Brazil is in the 71st among 141 countries, while the IGI (Global Index of Innovation) points to a drop from the 64th to the 66th position among 129 countries. In Latin America, Brazil follows behind Chile (51st), Costa Rica (55th) and Mexico (56th), for example.
Still, there is widespread optimism and the government and society are not standing still. There are several actions to reverse the situation, such as the approval of the Provisional Measure (MP) for Economic Freedom; the Legal Framework for Startups; Internet of Things: an action plan for Brazil; the National Program for Incubators and Technology Parks, the Brazilian Strategy for Digital Transformation (E-Digital), and also several forums for dialogue with the productive sector through the Sectorial Executive Tables, Brazilian Chamber of Industry 4.0, among others.
However, there are two extremely worrying points that can limit the growth of the IT sector and impact the development of the Brazilian economy: the scarcity of qualified labor and the fiscal war between the state and municipalities. The qualification of labor is a challenge with no solution in the short term, but there is clearly a union of the private sector, society and government in the search for the reversal of this situation, with the emergence of several initiatives and actions related to qualification and , mainly, promoting education in the area of STEM (Science, Technology, Engineering and Mathematics), such as MeuFuturo.Digital and Movimento Brasil Digital.
The fiscal war is an extremely critical issue. In 2017, the National Council for Farm Policy (Confaz) authorized the States to charge ICMS on software sales, but did not discuss with the municipalities to suspend the collection of ISS, leaving the sector at risk of extinction as a result of double taxation. Now, the topic will be on the Supreme Court's agenda in 2020, which will decide the winner of this war: the State or the Municipality. Just when the congress is discussing a broad tax reform, which will certainly define a new tax format for the sector.
What is expected is that the sector will continue to be taxed by the Municipal ISS, as it always has been, since a decision favorable to the ICMS will create a gigantic liability, where certainly no company will be able to afford this liability, with a fine and interest, mainly because the municipalities will not reimburse companies for ISS paid.
Why not wait for tax reform to resolve this impasse? Because it is easier to complicate than to facilitate. Who will invest in an industry with a high risk of turning to dust?
* Rodolfo Fücher is president of ABES (Brazilian Association of Software Companies)
EN 
PT 
