Brazil seeks to be major exporter in defense

Data from Brazil’s Defense Ministry show Brazil will once again become a great exporter of defense products. According to the ministry, the historic average of exports—which totaled $214 million in the last years—is nearing $357 million this year.

In the view of the ministry’s Secretary for Defense Products Marcos Degaut Pontes, this value may reach $1.4 billion by 2022, even though the percentage of the sector on Brazil’s foreign trade agenda is low.

Diversified production

Brazilian production in the field is wide, and includes items like guns, missiles, armored vehicles, training aircraft, light attack aircraft, large multiple-use aircraft (Embraer’s new KC 390), air traffic control systems, and defense systems. “As we say in [Brazilian Portuguese] military jargon, from the needle to the rocket,” Pontes said.

Brazil has lost major markets in defense since the 80s, he mentioned, and now the Defense Ministry is devising a strategy to tackle the bottlenecks hindering the growth of exports.

In his view, some of the difficulties stem from the fact that the sector is not regarded as important to the country’s economy. “In general terms, Brazilian society doesn’t understand what we term defense economy—the industrial side of defense as a generator of highly qualified jobs and source of income. It’s a sector with a far-reaching multiplying effect on the economy, a sector that brings about a major qualitative leap in technological development. It’s a sector that brings in taxes, royalties, funds, with a great exporting potential,” he said.

To each dollar invested in this sector, he added, the yield is close to $10. “This must be discussed. We must understand the importance of defense economy to the national economy and the Brazilian foreign trade. No other sector is as profitable,” he argued.

Pontes announced that the Defense Ministry has implemented a comprehensive strategic plan which found the sector’s bottlenecks and solutions. “This is a word of advice given by the president,” he noted.

The secretary remarked that Brazilian was able to overcome some of the obstacles around funding and guarantees in the field. “This is crucial for Brazilian companies to export. Sixty-five percent of the controlled material produced is exported. With no funding and no guarantees, one cannot move forward, and we are,” he went on to state.

Government to government

The funding, the secretary said, is provided by private Brazilian or foreign banks, but guarantees are usually public. “Hence the key role of reducing obstacles, because there’s no use in having funds without the guarantee that the product will be delivered. And that’s only possible today with the official institutions,” he declared.

He made special mention to the production of non-lethal equipment, like planes and air control and frontier surveillance systems. “It’s a wide range of products.”

Pontes talked about another particular feature of the sector. “Business happens government-to-government. You don’t sell defense products to the private enterprise. A government sells to another government. Governments are the only ones that have them,” he said.