Brazil softens stance to reconsider ban on foreign land ownership
BRAZIL is looking at easing restrictions on the acquisition of land by foreigners to boost investment in agriculture and forestry as Latin America’s biggest economy heads toward its worst year since at least 1992.
An effective prohibition on selling land to foreign individuals and companies has been in place since 2010 when Brazil’s attorney general published a narrow interpretation of a 1971 law meant to defend the country’s sovereignty. Katia Abreu, Brazil’s first female agriculture minister and an outspoken defender of agribusiness, said on Monday that the restriction limited investment and needed to be revisited.
“We need to find a middle ground so that investing in Brazilian land is permitted,” Abreu said. “We’re working so this rule can once again be modified… so it won’t be totally prohibited.”
Some authorities in Brazil are softening their stance on resource nationalism as slumping commodity prices, a corruption scandal surrounding state-run oil company Petroleo Brasileiro and its suppliers and credit tightening are pushing the economy toward a 1.2 percent contraction this year, according to a central bank survey of economists published on Monday.
Abreu spoke a day after Energy Minister Eduardo Braga said he supported a bigger role for foreign drillers in Brazil’s deepwater reserves.
Allowing foreign firms to become operators in Brazil’s so-called pre-salt oilfields would require congressional approval and is resisted by the party of President Dilma Rousseff.
Investment
Lawmakers from the Democratic Movement Party, the party of Abreu and Braga and part of Rousseff ’s ruling coalition, have led the charge to change legislation restricting foreign investment in land and oil.
Just as representatives from states that depend on the oil industry advocate for less restrictions on pre-salt areas, ruralist congressmen are opposing the ban on international firms buying land.
The 2010 decree limiting the purchase of land by foreign companies has been challenged on economic and legal grounds since it was published, including last month in the Supreme Court. Guidelines published in 2013 set a tight limit on the total area and percent of a municipality that can be purchased by a foreign firm without congressional approval.
Titles to land bought by foreigners before 2010 are legally protected, the press office for the Attorney General’s Office said. The office declined to comment on its participation in discussions to revise the rules.
The rule is holding back Brazil’s agricultural development by applying a blanket restriction to all foreign companies that was meant for sovereign wealth funds, according to Luiz Cornacchioni, the executive director of Brazil’s agribusiness association. He said all agriculture areas stood to gain from easing the ban because foreign companies would not invest in land to which they had no legal rights.
Abreu said she was working with other ministries and Brazil’s attorney general to find alternatives to the regulation. – Bloomberg KENYA’S central bank had seen some speculation on the shilling and would “scale up” its open market operations to stem market volatility, deputy governor Haron Sirima said yesterday. Sirima said in a speech that the central bank had adequate foreign exchange reserves, and an International Monetary Fund (IMF) precautionary facility, which were adequate to contain the exchange rate volatility of the shilling. The shilling recovered some ground to the dollar yesterday after the central bank sold an undisclosed amount of the US currency into the market after it hit a new three-year low. – Reuters